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The U.S. authorities' enduring dispute with Switzerland over bank secrecy has claimed its first corporate victim, with the effective disappearance of Wegelin & Co., one of the country's oldest and best known private banks.

Wegelin, facing potential indictment from the U.S. over alleged collusion in helping Americans to evade tax, has sold the bulk of its business to Switzerland's Raiffeisen co-operative banking group for an undisclosed sum.

The deal involves about $23-billion (U.S.) in assets under management, 700 employees and offices in 13 Swiss cities.

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The transaction, arranged in great haste, will boost the ambitions of Raiffeisen, an exclusively Swiss retail bank, to grow in private banking. The group owns a minority stake in private Bank Vontobel and was last November an under-bidder in the auction for a majority of Basel-based Sarasin.

To avoid risks of legal "contamination" from Wegelin's problems in the U.S., where three of its Switzerland-based private bankers were this month indicted by the U.S. authorities, Raiffeisen is not buying any of the latter's U.S.-related business.

In a complex deal, Wegelin, founded in 1741 and controlled by eight partners who have the risk of personal liability, has transferred all its non-U.S. activities to a formerly passive sub-brand, Notenstein Privatbank. The latter has in turn been sold to Raiffeisen, where it will form a standalone subsidiary.

Wegelin will remain a legal entity and six of its partners will remain with the company. The two others, who are least associated with Wegelin's U.S. business, have moved to Notenstein, which will be headed by Adrian Künzi, one of the two former Wegelin partners.

Wegelin's problems arose from the revelation that – like a handful of other Swiss banks – it had, from roughly 2008, taken the ill-judged step to welcome former U.S. offshore customers of UBS AG .

Many such clients were desperate to establish a new Swiss banking relationship once UBS decided to close its Swiss-based offshore private banking operations for rich Americans after a legal battle with the U.S. authorities, which ended with a $780-million settlement and the disclosure of almost 5,000 U.S. client names.

Pierin Vincenz, Raiffeisen's chief executive, said the construction would ensure his group would avoid liability for any further potential U.S. actions against Wegelin or its former partners. Mr. Vincenz said Raiffeisen had pursued lengthy discussions with Switzerland's Finma supervisory authority, which was in turn one of the Swiss government bodies negotiating with the U.S. over the broader issue of Swiss banks' involvement with undeclared U.S. accounts.

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However, Mr. Vincenz was unable to provide any definitive indication that Raiffeisen might avoid becoming embroiled in Wegelin's problems. "This transaction is an absolutely responsible one for Raiffeisen," he said.

The speed and surprise of the deal triggered speculation Wegelin had been forced into a deal by Swiss regulators, and that Raiffeisen was the only willing suitor.

Both banks are based in the eastern Swiss city of St. Gallen and have close informal contacts. Mr. Vincenz denied he had been pushed into a match and implied other banks had also looked at Wegelin.

But he conceded Raiffeisen's interest and plans to expand in private banking were well known, as were the two banks' affinities stemming from having their headquarters in the same city.

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