Swiss National Bank chairman Philipp Hildebrand resigns


Philipp Hildebrand: "I had no knowledge of my wife's transactions that day"

The chairman of the Swiss National Bank (SNB), Philipp Hildebrand, has resigned with immediate effect.

It follows revelations his wife Kashya bought $504,000 (£323,024) in August, three weeks before the central bank intervened to cap the Swiss franc.

He told a news conference he had “no knowledge” of his wife’s transaction, which she later made a profit on.

The SNB said last week that Mr Hildebrand’s wife had broken no rules by making the currency trades.

According to an investigation carried out by accountants PricewaterhouseCoopers (PwC) on the bank’s orders, Mrs Hildebrand bought $504,000 on 15 August because she wanted to have half of the family’s assets in US dollars.

In early September, the central bank intervened to try to weaken the strong franc.


image of Robert PestonRobert PestonBusiness editor, BBC News

Central bank governors are the world’s great unelected economic powers – setting interest rates, bossing banks, trying to curb inflation and maintain economic stability.

So they are supposed to be beyond reproach, never once thinking of their own wealth, only that of their respective nations.

That’s is why it was so embarrassing for the Swiss central bank governor, Philipp Hildebrand, that his wife made a SFR 75,000 profit from buying dollars ahead of a decision by her husband to stem a rise in the Swiss currency.

He has quit – not because this former hedge fund manager was involved in the transaction, but because (he says) he can’t prove beyond a shadow of doubt that he wasn’t.

“The moment a governor gets the impression that he doesn’t have full credibility anymore, he needs to resign,” said Mr Hildebrand.

His departure will be seen as unfortunate by his British counterparts, because he was seen as one of their rare and important allies in international negotiations to strengthen banks.

That meant that four weeks later, when the family sold $516,000, converting it back into Swiss francs in order to buy a new property in Switzerland, they made a profit on the transaction. That was because the franc had fallen against the dollar in that time.

Speaking at a press conference in Berne, Mr Hildebrand said: “I have come to the conclusion it is not possible to provide conclusive and final evidence that my wife did initiate the transaction without my knowledge.

He added: “I would like to think I have been a damn good central banker.

“I personally advocated strongly and early for stricter capital requirements for the big banks,” he added. “The policy of the central bank was a success in recent years.”

The Swiss National Bank cleared Mr Hildebrand of any wrongdoing in a report in late December.

This report, which detailed his wife’s dealings, was published last week as new allegations surfaced.

The Swiss weekly magazine Weltwoche alleges Mr Hildebrand personally authorised foreign exchange dealings using his personal account three weeks before, and three weeks after Switzerland introduced a currency cap.

Strong currency

The Swiss National Bank said it will continue to defend “with the utmost determination” the exchange rate floor of 1.20 francs a euro.

It added it “regretted the decision and the circumstances” that led to Mr Hildebrand to step down as chairman.

The 48-year-old former hedge fund manager’s two-year chairmanship of the Swiss National Bank has not been without controversy.

He had faced calls to go after he ran up record losses in 2010 to try to halt the rise of the Swiss franc, an effort which cost the central bank 26.5 billion francs (£18bn; $27.8bn in current prices).

However, his work was valued by some key figures in the financial world.

Bank of England governor Sir Mervyn King said in a statement: “We all know that he is a man of total integrity, extraordinary ability and, most important of all, courage.

“Such people are rare. His country will miss him.”

Position ‘untenable’

The strong currency rise in 2011 hit Swiss exporters, making goods more expensive for foreign buyers, and hurting Swiss companies’ profits when they repatriate their foreign earnings back home.

It saw Switzerland cut its 2012 growth forecast from 0.9% to 0.5% last month.

Tony Nyman, an analyst at Informa Global Markets, said Mr Hildebrand’s position was “almost untenable and so it has proved”.

“The Swiss franc has actually gained on the news possibly due to hopes of increased integrity ahead, but also market positioning too,” he said.

“Once the news gets digested, we do not expect a lasting impact on the franc from the news, however.”

Related Posts

  • No Related Posts

Filed Under: BBCBreaking NewsBusinessEuropeForexNewsTop News story

About the Author:

RSSComments (0)

Trackback URL

Leave a Reply

If you want a picture to show with your comment, go get a Gravatar.