Swiss central bank President Philipp Hildebrand will tomorrow break his silence on currency trading by his wife after a U-turn by officials led to the release of an internal report on the transactions and rules governing them.
Hildebrand, 48, will “comment on the last days’ events and respond to questions,” the Swiss National Bank said in an e-mailed statement from Zurich today, calling some media reports “partly incorrect.” It also released a report by PricewaterhouseCoopers LLP conducted last year, saying the transactions by the president and his spouse were in line with central bank rules that were also disclosed today.
With its move, the Swiss National Bank yielded to growing pressure by local media alleging that the central banker may have used insider knowledge to his advantage. Two out of three currency transactions that were investigated more closely and conducted last year were cleared, while one dollar purchase carried out by Kashya Hildebrand without her husband’s knowledge was seen as “delicate” by investigators.
The affair cuts to the core of Swiss politics and finance. Kashya Hildebrand’s currency purchase came about three weeks before the Swiss National Bank rattled investors by imposing a ceiling on the franc for the first time in three decades. In addition, Bank Sarasin, a Basel-based private bank, said it fired an employee who passed data on the trades to Christoph Blocher, vice president of the Swiss People’s Party, who last year called on Philipp Hildebrand to resign after the SNB’s currency transactions led to a record loss.
On Aug. 15, Kashya Hildebrand spent 400,000 francs to buy $504,000 without informing her husband first. He was only told of the transaction on the following day and instructed Bank Sarasin only to act on his orders in future, according to the report. In March, he had carried out a currency transaction worth 1.1 million francs, following a Swiss property sale.
The Bank Sarasin employee, who wasn’t named, worked in information technology and passed the data to a lawyer, who then arranged a meeting with Blocher on Nov. 11, the bank said.
The employee went to Zurich’s police on Jan. 1 and admitted criminal misconduct, according to the statement.
Weltwoche magazine said that the Bank Sarasin employee has filed a criminal complaint against Hildebrand for alleged insider trading. An official for the state prosecutor in the Swiss canton of Zurich declined to comment on whether the prosecutor received a complaint.
Philipp Hildebrand was first informed about the allegations on Dec. 15, the day the central bank left the benchmark interest rate at zero and maintained its franc cap of 1.20 versus the euro. He then fully disclosed details about his own and his family’s bank accounts.
The PricewaterhouseCoopers probe was commissioned by the SNB Bank Council, the central bank’s supervisory body, who made a statement on Dec. 23, exonerating Hildebrand and his family.
Kashya Hildebrand, a former hedge fund employee, said in a statement published on Swiss Television’s 10 vor 10 program late yesterday that she purchased dollars because “it was at a record low and almost ridiculously cheap” at the time.
“The day after the dollar purchase, the SNB’s general counsel was informed for the sake of transparency, and there were no objections to the transaction,” she said. “That’s why I am very surprised about the current interest in the matter.”
Kashya Hildebrand was born in Rawalpindi, Pakistan, to a Pakistani father and an American mother. At the age of four, she moved to the U.S. and later worked for hedge fund Moore Capital Management in New York, where she met her future husband, according to Tages-Anzeiger. After moving to Switzerland, Kashya Hildebrand focused on the art business, opening galleries in Zurich, New York and Geneva. The couple has one daughter and live in Zurich.
Philipp Hildebrand joined the SNB’s governing board in 2003 after being chief investment officer at Zurich-based Vontobel Group and Union Bancaire Privee in Geneva. He became SNB president in January 2010.
Billionaire entrepreneur Blocher, 71, helped to transform the Swiss People’s Party from an agrarian group to a populist anti-immigrant party. He was ousted from the Cabinet in 2007.
After the central bank amassed a record loss of $21 billion in 2010 through foreign-currency actions aimed to fight deflation and help exporters, Blocher said Hildebrand should resign, calling the moves “senseless speculation.”