Bloomberg News

SNB Returns to Profit From Record Loss on Currency Holdings

January 16, 2012

(Updates with comment from economist in fourth paragraph.)

Jan. 13 (Bloomberg) -- The Swiss central bank returned to a profit in 2011 and said it will distribute money to regions, quelling criticism sparked by the previous year’s record loss.

The profit was 13 billion Swiss francs ($13.8 billion), the Zurich-based Swiss National Bank said in a statement today, citing an initial estimate. The valuation gain on its gold holdings contributed 5 billion francs to the result while foreign-currency positions added 8 billion francs. It will distribute 1 billion francs to cantons and the federation.

The SNB came under fire last year after currency purchases sparked a record loss. Christoph Blocher, from the Swiss People’s Party, which had spearheaded efforts opposing the intervention policy, contributed to what led to Philipp Hildebrand’s resignation as chief on Jan. 9 by handing leaked documents of personal bank transactions to the government.

“This will help the embattled SNB to preserve its reputation after the media outcry amid the resignation of Hildebrand,” said Peter Rosenstreich, chief currency analyst at Swissquote Bank SA in Geneva. “The Swiss cantons will be happy to get a share of the profit.”

Record Loss

The SNB is a joint-stock company in which public shareholders including cantons and regional banks have a stake of about 55 percent. Private individuals hold the remainder.

The franc was little changed after the announcement, trading at 1.2108 against the euro at 11:05 a.m. in Zurich. It has remained above 1.20 since the SNB imposed the cap on Sept. 6. Against the dollar, it traded at 94.37 centimes.

Hildebrand, a former hedge-fund manager, stepped down after failing to prove that his spouse acted independently on a purchase of $504,000 for francs in August, three weeks before the SNB imposed its ceiling. Hildebrand’s wife Kashya told Swiss television this week there was an “error of judgment” and the “transaction should have been reversed.”

Today’s profit contrasts with a record loss of 19.2 billion francs in 2010, when the euro’s slump versus the franc eroded the value of the SNB’s foreign-currency holdings amassed during 15 months of interventions. By imposing a franc cap of 1.20 versus the euro in September, the central bank was able to stabilize the exchange rate and avert a repeat of losses.

“Today’s profit announcement will bolster the SNB’s national reputation,” said Claude Maurer, an economist at Credit Suisse Group AG in Zurich. “However, it doesn’t strengthen its credibility as a central bank because its ability to maintain price stability was never in doubt, even at the times of the massive losses.”

The SNB said it will publish the detailed full-year report with definitive figures on March 8.

--Editors: Simone Meier, Jennifer M. Freedman

To contact the reporter on this story: Klaus Wille in Zurich at

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

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