SNB to Reveal Board’s Currency Dealings After Hildebrand

Philipp Hildebrand
Former Swiss National Bank Chairman Philipp Hildebrand. Photographer: Gianluca Colla/Bloomberg

The Swiss National Bank’s supervisory council will today publish the results of a probe into transactions by the bank’s board members and their deputies after currency purchases prompted Philipp Hildebrand to quit.

The SNB’s council will disclose the results at a briefing at 3:30 p.m. in Zurich. Governing board members Thomas Jordan, Jean-Pierre Danthine as well as the deputies -- Thomas Wiedmer, Thomas Moser and Dewet Moser -- were forced to reveal all transactions after a furor when details emerged of a currency purchase by the former president’s wife about a month before policy makers imposed the first franc cap in three decades.

The SNB, which proposed to toughen internal rules in January, said last month that the Bank Council will probably submit the name of a candidate to join the board in April. While Jordan, 49, was appointed interim chairman on Jan. 9 and since pledged to defend the franc ceiling of 1.20 versus the euro, the government has signaled it wants to wait for the outcome of the probe before officially appointing a president.

“Should the results show that Jordan indeed has a clean slate, it would be all but sure that the government will appoint him chairman,” said Ralf Wiedenmann, chief economist at Vontobel Asset Management Ltd. in Zurich. “Pressure on the government to act quickly in replacing Hildebrand will build.”

The franc traded at 1.2055 versus the euro at 10:47 a.m. in Zurich, little changed on the day. Versus the dollar, it was at 91.77 centimes.

Sensitive Transactions

The KPMG probe showed both board members and all three deputies had acted in line with the SNB’s internal rules, Tages-Anzeiger reported today, citing an unidentified person familiar with the matter. The SNB council sees no obstacle to appointing Jordan new president, the newspaper said.

Hildebrand, who will be part of the probe, resigned after a previous investigation showed that his wife had purchased $504,000 in August. The SNB imposed the currency cap on Sept. 6. The investigation will also look into transactions over the two previous years, when the central bank had spent 15 months purchasing foreign currencies to weaken the franc.

The SNB said on Feb. 17 that a “longlist of possible candidates for the vacant position” on the three-member board is “currently being drawn up based on an already approved requirement profile.” The seven-member governing coalition will then elect a new board member as well as a chairman.

‘Latent Distrust’

While Jordan has already said he’s willing to accept the post, Der Sonntag newspaper reported on Feb. 19 that some government members may be opposed to the economist taking the helm of the SNB. Bank Council member Gerold Buehrer, who is also head of the Economiesuisse lobby group, said on Jan. 27 that it would be good for the government to elect a successor to Hildebrand sooner rather than later.

Janwillem Acket, chief economist at Julius Baer Group Ltd. in Zurich, agrees.

“The government is not fully backing the current SNB managing team but displays many elements of latent distrust,” he said. Even if their election process “may be intended to be cautious and thorough, they can easily be perceived by the markets as wavering, hesitant, unsure and weak.”

Jordan on Feb. 28 called the franc still “massively” overvalued, while pledging to defend the ceiling “with all determination” if needed to protect the economy. The SNB “remains firmly committed to defending” the franc ceiling and won’t “tolerate any trading below” 1.20, he said earlier.

The SNB will publish full-year earnings tomorrow and hold its next monetary policy assessment on March 15. The supervisory council is set to approve new internal rules with “far-reaching restrictions on financial investments” of the so-called enlarged board, including the three deputies, as soon as March, it said last month.

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