Swiss National Bank Chairman Philipp Hildebrand resigned with immediate effect on Monday, saying he could not prove he had been unaware of a currency trade made by his wife and wanted to protect the integrity of the central bank.
Hildebrand’s decision to relinquish one of the world’s top 10 central banking jobs after just two years 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.
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 August 15, three weeks before her husband oversaw steps to cap the rise of the franc.
At a news conference four days ago, Hildebrand had resisted calls to step down, saying he only learned of his wife’s trade the day after she made it and rejecting claims that he had personally authorized the currency deal.
But he told reporters 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 have come to the conclusion that it is not possible to provide conclusive and final evidence that my wife did indeed initiate the foreign exchange transaction on the 15th August without my knowledge,” he said.
“The fact is: my word is my bond. I had no knowledge of my wife’s transaction on that day,” he said.
Hildebrand said he had decided the pressure might compromise his ability to take tough decisions to address what he called “probably the most threatening economic and financial situation since the Second World War.”
“I am sad to take this step, I loved this job, I fought like a lion for it,” he said.
Christoph Moergeli, a politician from the right-wing Swiss People’s Party (SVP) which publicized details of the currency trade, welcomed Hildebrand’s resignation.
“There was nothing left for him to do. It’s not acceptable internationally when the head of the Swiss National bank speculates with currency,” he told Reuters.
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 September 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.
SNB RULES SCRUTINISED
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.
The SNB council said on Saturday it would overhaul its internal rules concerning own trading by board members and examine all transactions they made over the past three years.
Hildebrand said the scandal had revealed weaknesses in the SNB’s internal regulations, as well as its requirements in terms of transparency and code of conduct.
“The focus now should be on resolutely eliminating these weaknesses. This will allow the SNB to retain its credibility, which is its greatest asset,” he said.
Christoph Darbellay, the Christian Democrat chairman of parliament’s economic committee that Hildebrand had been due to address, said it would look into whether the SNB should tighten its rules.
Darbellay said the committee would also look into the breach of Switzerland’s cherished banking secrecy by the whistleblower and the Swiss People’s 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 adversaries from SVP, was quoted on Monday as 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.”
Source : Reuters
