Bloomberg News

Hildebrand Will Stay as SNB Chief, Defying Pressure to Resign

January 08, 2012

Jan. 5 (Bloomberg) -- Philipp Hildebrand said he plans to stay at the helm of the Swiss National Bank and that he didn’t abuse his position after a currency transaction by his wife.

“I acted not only according to the rules, but also in an appropriate manner,” Hildebrand, 48, said at a press briefing in Zurich today. “I am not aware of any breach of laws. But I understand that the public is having some questions.”

Pressure on Hildebrand to step down increased after reports by local media that the former hedge fund manager used insider knowledge to his advantage. While the SNB agreed to publish rules on personal ethics yesterday and an independent probe cleared the central bank head of wrongdoing, a dollar purchase over $504,000 carried out by his wife in August, three weeks before the SNB imposed a franc cap, was found “sensitive.”

Swiss magazine Weltwoche reported yesterday that bank- account statements showed Hildebrand himself sold 400,000 francs ($420,000) for dollars on Aug. 15. Hildebrand later said his spouse made the transaction without his knowledge.

Academics including Georg Lutz, a political scientist at the University of Lausanne, Switzerland, say the 105-year-old institution must do more to move away from a culture of bank secrecy, calling the loss of confidence “dramatic.”

Hildebrand joined the central bank in 2003, becoming its youngest ever policy maker, and took over as president in January 2010. Before that he was chief investment officer at private banks Vontobel Group in Zurich and Union Bancaire Privee in Geneva.

Currency Ceiling

As head of the SNB, he helped toughen financial regulation, forcing UBS AG and Credit Suisse Group AG to boost capital buffers. He also lowered borrowing costs to zero and in September introduced the first currency ceiling since the 1970s to help protect the economy after the franc reached a record against the euro.

That move came three weeks after a currency purchase by Kashya Hildebrand. A former hedge fund employee who owns a Zurich art gallery, she has defended the purchases, saying she bought dollars because the currency was “at a record low and almost ridiculously cheap.” She also said 70 percent to 80 percent of financial transactions at her gallery are in dollars.

Bank Sarasin, a Basel-based private bank, said on Jan. 3 it had fired an employee who helped pass data on trades by the Hildebrands to Christoph Blocher, vice president of the Swiss People’s Party and a political opponent of the SNB head. Zurich state prosecutors said today they have begun a criminal investigation into a possible breach of the banking secrecy law by the employee, who worked in the information-technology unit.

Property Sale

Hildebrand was told about the allegations of insider trading on Dec. 15, the day the SNB left the benchmark interest rate at zero and maintained its franc cap of 1.20 versus the euro. He immediately informed the central bank.

Documents published yesterday show that the SNB president had carried out a currency transaction worth 1.1 million francs in March, following a Swiss property sale. There was “no evidence of misuse of privileged information,” the report said. Under SNB compliance rules, board members are forced to maintain currency positions for at least six months.

The government reiterated yesterday that it had “confidence” in Hildebrand and said it had no reason to doubt the findings of the PricewaterhouseCoopers probe. The investigation was commissioned by the SNB Bank Council, the central bank’s supervisory body, which made a similar statement on Dec. 23, exonerating Hildebrand and his family.

--With assistance from Leigh Baldwin in Zurich. Editors: Simone Meier, Fergal O’Brien

To contact the reporters on this story: Klaus Wille in Zurich at; Jennifer M. Freedman in Geneva at

To contact the editor responsible for this story: Craig Stirling at

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