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Swiss central bank chairman quits over wife’s currency trade
Swiss National Bank Chairman Philipp Hildebrand resigned with immediate effect today, saying he could not prove he had been unaware of a controversial currency trade made by his wife and wanted to protect the integrity of the central bank.
Hildebrand’s decision to relinquish one of the top 10 central banking jobs in the world came as Swiss parliamentarians met to discuss the scandal, which erupted last week after Sarasin bank sacked an employee who leaked details of the trade to a political opponent of the central banker.
Until now, Hildebrand had resisted calls to step down, saying he learned of his wife’s trade the day only after she made it and rejecting claims by Swiss magazine Weltwoche that he had personally authorised the currency deal.
But he told a media conference on Monday he could not provide final evidence that he had been unaware of the trade and had decided to step down to protect the credibility of the Swiss bank, especially given the difficult economic situation.
“I cannot once and for all prove that it was as I said it was,” Hildebrand said.
Hildebrand’s wife, Kashya, a former hedge fund trader who now runs a Zurich art gallery, bought 400,000 Swiss francs ($418,000) worth of dollars on Aug. 15, three weeks before her husband oversaw steps to cap the rise of the franc.
The SNB’s supervisory council said in a statement Vice Chairman Thomas Jordan, who joined the SNB in 1997, would take over as chairman for the time being and the free position on the governing board would be filled as soon as possible.
The three-person board, previously made up of Hildebrand, Jordan and Jean-Pierre Danthine, reiterated its determination to stick to the cap on the franc at 1.20 per euro imposed on Sept. 6, “with utmost determination.”
Hildebrand had been due to appear before the parliamentary economics committee alongside the head of the SNB’s supervisory council, Hansueli Raggenbass, who is also under pressure over the affair, which has tarnished the central bank’s reputation.
“As we suggested last week his position was almost untenable and so it has proved,” said Tony Nyman of Informa Global Markets. “The Swiss franc has actually gained on the news possibly due to hopes of increased integrity ahead, but also market positioning too.”
The Swiss franc, which Hildebrand has fought to stop soaring on safe-haven buying driven by the euro-zone debt crisis, rose on the announcement, trading up 0.1 percent at 1.2138 per euro.
“From a policy point of view there will be no change and the Swiss franc will revert to where it was before the knee-jerk reaction,” said Gavin Friend, an analyst at National Australia Bank.
The scandal has raised questions about transparency at the central bank, which initially failed to publish its internal ethics codes, saying auditor PricewaterhouseCoopers (PWC) had investigated the trade and found there had been no misuse of privileged information.
Christoph Darbellay, the Christian Democrat chairman of parliament’s economic committee, said it would focus on whether the SNB should tighten its rules.
“We are not a court, just a parliamentary commission. I think were going to be talking about the future; is there a need to change the code? In principle they (the trades) were according to the rules,” he told reporters earlier.
Darbellay said the meeting would also look into the breach of Switzerland’s cherished banking secrecy by the whistleblower and the SVP party, which is normally a strict defender of the privacy rules.
“The breach of bank secrecy and using it for political goals, that was grave,” he said.
The former Bank Sarasin employee accused of leaking the data is called Reto Tarnutzer, Reuters has learned.
Tarnutzer, who leaked details of the trade to the lawyer of one of Hildebrand’s political adversaries from the right-wing Swiss People’s Party (SVP), was quoted on Monday saying he had never wanted the private bank details made public.
“I wanted to achieve clarification and not an issuing of data,” he wrote in a letter sent to several Swiss dailies.
He described the SVP’s decision to hand over the information to the media as “ruthless,” saying that the breach of bank secrecy endangered his future: “Here a potentially only small crime was fought with a bigger crime.”
The psychiatric clinic where Tarnutzer was reportedly admitted after an apparent suicide attempt declined to comment.