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UPDATE 1-Lawmakers pressure Credit Suisse boss Dougan to resign

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ZURICH, May 12 (Reuters) - Credit Suisse boss Brady Dougan is under pressure from lawmakers to resign over the Swiss bank's role in helping wealthy Americans dodge taxes, a legal headache that could cost the bank as much as $1.6 billion to resolve.

The Zurich-based bank is the highest-profile target in a U.S. probe that has cast a shadow over the Swiss banking industry since larger rival UBS became the first major lender to settle tax charges five years ago.

Switzerland's left-wing Social Democrats (SP) on Sunday called for Dougan to step down saying he and other executives represented part of the problem, raising the stakes for Dougan as he seeks to settle the tax case with U.S. authorities.

"If you're justifying your high salary with the responsibility you carry, then you cannot duck that responsibility in an emergency," SP president Christian Levrat said in a statement.

Levrat's comments pair the hot-button issue of bankers' pay in Switzerland with the pursuit of Swiss banks by U.S. authorities over untaxed funds held offshore, which has intensified for Credit Suisse in recent weeks.

Credit Suisse, the country's second-largest bank behind UBS, lifted chief executive Dougan's pay by more than a quarter last year to 9.8 million Swiss francs ($11.06 million), despite not meeting all performance targets and a hike in litigation costs related to the U.S. probe.

Centrist BDP politician Martin Landolt - a former banker who spent three years at rival UBS - stopped short of calling for Dougan to leave now, but said the banker might consider resigning once the tax case is settled.

"When a solution for the U.S. problem is found, depending on what the settlement is, I would find it appropriate for Dougan to take responsibility and make way for a new beginning," Landolt told Reuters on Monday.

"This is necessary to ensure Credit Suisse's image doesn't suffer, for client trust to be restored, and for the bank's own credibility."

Credit Suisse declined to comment.

ROTTING FISH

Dougan, an U.S. citizen and 24-year veteran of Credit Suisse, has been a lightning rod for pay criticism since 2010, when a five-year share bonus programme topped up his regular salary to 90 million francs.

Shareholders grilled Dougan and other top executives over their pay at Credit Suisse's shareholder meeting on Friday.

"As the saying goes, a fish rots from the head down. In this case, the head is Brady Dougan," retail shareholder Ernst Schmid told the shareholder meeting before asking Dougan to step down.

However, two pay-related votes were ultimately approved.

Negotiations between Credit Suisse and the U.S. Justice Department to resolve the long-running investigation have heated up since Dougan testified before a Senate panel in February.

There, Dougan said the bank would accept wrong-doing by its staff, blaming a small group of Credit Suisse's private bankers for the behavior.

On Friday, Swiss asset management firm Swisspartners Group agreed to pay $4.4 million as part of the tax evasion probe, a move that could influence the course of the Credit Suisse case, according to a source familiar with the bank's investigation.

($1 = 0.8861 Swiss Francs)

(Additional reporting by Oliver Hirt and Joshua Franklin; Editing by Erica Billingham)