Davos Signals Confidence in Franc Cap as SNB Seeks New Chief

Davos Signals Confidence in Franc Cap as SNB Seeks New Chief
Attendees pass through the Congress Center of the World Economic Forum (WEF) in Davos. Photographer: Chris Ratcliffe/Bloomberg

Delegates at the World Economic Forum signalled confidence that the Swiss National Bank will keep up its defence of the franc’s ceiling as the bank looks for a new chief after Philipp Hildebrand’s surprise resignation.

“The SNB is a very stable institution,” Swiss President Eveline Widmer-Schlumpf told reporters after meetings with world leaders in the Swiss Alpine resort. Patrick Odier, head of the Swiss Bankers Association, said in an interview he’s “confident in the existing structure” of the SNB.

Hildebrand stepped down on Jan. 9 following a probe into his wife’s currency trades, prompting Swiss policy makers to fan out and reiterate a pledge to defend the cap of 1.20 versus the euro with the “utmost determination.” While the the franc rose to the highest since September after the announcement, it has stayed below its ceiling and traded at 1.2065 versus the euro on Jan. 27.

The SNB imposed the ceiling in September as the euro region’s worsening debt crisis prompted investors to pile into the Swiss currency.

“The SNB is in a position to print as many Swiss francs as necessary to preserve that,” billionaire investor George Soros told reporters in Davos. “That was a very clever maneuver on the part of the SNB.”

SNB Search

The SNB’s supervisory Bank Council has already started its search for a candidate to join the three-member board. The government will take a decision based on the council’s suggestions and also appoint a new president. Thomas Jordan was elected interim chairman on Jan. 9, with Jean-Pierre Danthine the only other board member left to steer the SNB.

SNB council member Gerold Buehrer said in an interview in Davos on Jan. 27 that it’s “clear” that a new chairman should be elected sooner rather than later.

“We of course need to search everywhere professionally and that shouldn’t take forever,” said Buehrer, who is also head of Switzerland’s Economiesuisse lobby group. Asked about an appointment in April or May as earlier suggested by Widmer-Schlumpf, he said “that’s too late.”

“It’s decisive that we find a good solution,” Swiss Economy Minister Johann Schneider-Ammann said in Davos. “Whether that’s sooner or later is secondary. It’s being worked on the matter and that’s essential.”

‘Positively Surprised’

While either Jordan or Danthine could be named chief immediately, the government has signaled it wants to wait for the outcome of a probe in financial transactions of all board members and the three deputies over the past years. The current deputies are Thomas Moser, Thomas Wiedmer and Dewet Moser.

Widmer-Schlumpf said she was “positively surprised” by Davos participants signaling their confidence in the SNB.

To Odier, it’s “more important to have the right person than choosing too fast.” Patrick de Maeseneire, chief executive officer of Adecco SA, the world’s largest provider of temporary workers based in Glattbrugg, Switzerland, said that any surprise management change doesn’t necessarily hurt a company.

No Compromise

“A vacuum can be bridged,” he said in an interview. “I would of course start the search and go for the best possible candidate. I can’t imagine people taking a compromise for timing reasons.”

Beatrice Weder di Mauro, a Swiss native and a member of German Chancellor Angela Merkel’s council of economic advisers, declined to comment when asked in Davos whether she’s interested in the SNB job. Deutsche Bank AG Chief Executive Josef Ackermann, who is also Swiss, said earlier this month that he doesn’t want the position.

Peter Rosenstreich, chief currency analyst at Swissquote Bank SA in Geneva, said he doesn’t see “credibility issues” under Jordan’s interim leadership.

“We have no doubt that the SNB will defend the first few attempts at the ‘floor’ with this extreme aggressiveness we have witnessed,” he wrote in an e-mailed note.

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