The regulator FINMA said it was "generally recommended" that banks book provisions for the 2013 financial year, a FINMA spokesman said, referring to a letter sent to the Swiss Banking Association and the Institute of Certified Accountants and Tax Consultants on Monday.

The regulator did not give any details on how much should be set aside to cover legal costs and expected fines.

The United States and Switzerland struck a deal in August to allow some Swiss banks to pay fines to avoid or defer prosecution as part of a U.S. pursuit of tax dollars sheltered in the world's largest offshore financial centre.

Swiss banks have until the end of the year to sign up to the programme which requires the banks to hand over some previously hidden information and face penalties equivalent to up to 50 percent of the assets they managed on behalf of wealthy Americans.

Many banks have come forward to say they will take part in the programme, including Geneva-based Banque Privee Edmond de Rothschild (>> Banque Privee Edmond de Rothschild SA) and EFG International (>> EFG International AG).

The success of the scheme, open to a host of second-tier banks in Switzerland, is key for a future settlement for 14 larger Swiss banks being investigated. Among those under investigation are Credit Suisse (>> Credit Suisse Group AG), Julius Baer (>> Julius Baer Gruppe AG), Pictet, local government-backed Zuercher Kantonalbank (ZKB) and Basler Kantonalbank (>> Basler Kantonalbank AG).

Last week, Basler Kantonalbank said it would take a 100 million Swiss franc ($112 million) provision against full-year earnings. Credit Suisse (>> Credit Suisse Group AG) took a 295 million franc provision two years ago.

(Reporting by Caroline Copley. Editing by Jane Merriman)