Bloomberg News

Hildebrand Steps Down at SNB After Franc Trade Controversy

January 09, 2012

(Updates with comment from economist in fourth paragraph.)

Jan. 9 (Bloomberg) -- Philipp Hildebrand resigned as head of the Swiss central bank after a currency transaction by his wife dented the credibility of the franc’s chief guardian.

The SNB president, 48, will make a statement on his decision at 3.15 p.m.’’ the bank said in a statement today. “He will also make a number of documents available.”

Pressure on Hildebrand to resign increased after media reported his family may have used insider knowledge to its advantage. While an internal investigation cleared him of wrongdoing, the purchase of $504,000 by his wife in August, three weeks before the SNB imposed a currency cap, was found “sensitive.” Economists at VTB Capital and Swissquote Bank SA said his departure will leave investors testing the franc cap.

“The market will now be questioning whether the credibility of the euro-franc 1.20 floor is in jeopardy,” said Peter Rosenstreich, chief currency analyst at Swissquote in Geneva. “Any serious threat to the floor will be immediately met with an aggressive response.”

The Swiss currency traded at 1.2138 versus the euro at 2:56 p.m. in Zurich. It has remained above 1.20 ever since the central bank introduced the minimum exchange rate on Sept. 6. It was at 95.13 centimes versus the dollar.

Franc Rally

Hildebrand’s departure from the SNB’s three-member board deprives Switzerland of a policy maker who managed to stem the franc’s rally to records against the dollar and the euro, which had threatened to derail the economy. Thomas Jordan, 48, is currently deputy chairman of the SNB.

Jordan “is the most qualified to succeed him,” said Alexander Koch, an economist at UniCredit Group in Munich. “He’s been there throughout the crisis.”

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.

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 and fight deflation threats.

Currency Purchase

As the global financial crisis spurred investors to buy francs, a haven in times of turmoil, the central bank tried to initially stem its advance by selling the currency in the 15 months through June 2010. Hildebrand introduced the cap in September after the franc reached a record against the euro, trading near parity in the previous month.

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.” While Hildebrand informed the SNB on the following day and later donated currency profits to a charity, lawmakers including Christoph Blocher from the Swiss People’s Party had called for his resignation.

Hildebrand’s “departure was inevitable but it’s left a vacuum at the SNB,” said Neil MacKinnon, global macro strategist at VTB Capital in London. “It’s unfortunate but his position was untenable. Markets will be looking at the SNB to carry on as normal.”

--With assistance from Gabi Thesing and Svenja O’Donnell in London. Editors: Simone Meier, Matthias Wabl

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

The Aging of Abercrombie & Fitch
blog comments powered by Disqus