Switzerland and France have settled a row over stolen bank records that was blocking a treaty aimed at helping Paris catch tax cheats.

Switzerland said in December it would freeze the tax treaty talks after French authorities obtained tax-sensitive client information from a former HSBC employee, which it said helped identify 3,000 suspected French tax evaders.

"We have found an agreement," Swiss Finance Minister Hans-Rudolf Merz said after talks with French Budget Minister Eric Woerth on the sidelines of a World Economic Forum (WEF) meeting on Wednesday.

"France has agreed not to use stolen data when asking for [tax] information," he said during a visit by French President Nicolas Sarkozy, an outspoken critic of tax havens, to address the Davos conference.

A French official said Paris would continue to use the HSBC data in prosecuting tax offenders, but confirmed it would not use the records to seek information on account holders from Switzerland under the agreement.

Both sides said there were still some details to be sorted out with regards to a letter accompanying Wednesday’s accord, but Merz said it should be sorted out within days.

Swiss Justice Minister Eveline Widmer-Schlumpf said she had asked France to hand the data back because it was obtained illegally, but Paris defended its decision, saying it had not broken any French laws.

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