Hildebrand May Give Evidence Amid Swiss Political Support
January 18, 2012, 8:34 AM ESTBy Klaus Wille
(Updates with comment from asset manager in last paragraph.)
Jan. 9 (Bloomberg) -- Swiss National Bank President Philipp Hildebrand will face questions from lawmakers in Bern today as he seeks to end a discussion over controversial currency purchases by his wife.
Hildebrand, 48, will submit e-mails to parliament that show his wife acted alone in making foreign-currency trades that led to calls for him to resign, Der Sonntag reported yesterday, without saying where it got the information. SNB spokeswoman Silvia Oppliger declined to comment.
“We need tougher rules on SNB’s board members’ transactions, and spouses should be restricted as well” said Christophe Darbellay, head of the Christian Democratic Party and president of the parliament panel that will question Hildebrand from 4 p.m. in Bern. He declined to say whether Hildebrand should stay in office.
Hildebrand on Jan. 5 expressed regret that he didn’t reverse his wife’s transaction over $504,000 in August, three weeks before the SNB imposed a currency cap. While the SNB president said he didn’t know about his spouse’s order, Weltwoche magazine reported that he had personally ordered the transaction. An external probe commissioned by the SNB Bank Council in December cleared what it called a “sensitive” transaction.
The Swiss currency traded at 1.2155 versus the euro at 12:33 p.m. in Zurich, little changed on the day. It was at 95.28 centimes versus the dollar.
Government Support
Swiss President Eveline Widmer-Schlumpf, who is also finance minister, told Swiss television in an interview broadcast on Jan. 6 that there’s “absolutely no reason” for the government to distrust Hildebrand. He helped contribute “to the relatively good situation” of the economy, she said.
The Zurich-based SNB maintained borrowing costs at zero on Dec. 15 and pledged to defend its franc ceiling of 1.20 versus the euro with unlimited currency purchases if necessary. Hildebrand was informed the same day of allegations after an employee at his private bank leaked confidential data.
Susanne Leutenegger Oberholzer, a lawmaker of the Social Democratic Party, said today that “the central question” is whether the SNB will be able to defend its currency policy.
Internal Investigation
“It’s important that the SNB remains in a position to act,” said Caspar Baader, a member of the panel and a lawmaker of the Swiss People’s Party. “There may have to be changes at the SNB board or the Bank Council.”
The party has already called for Hildebrand to resign, saying he is “no longer viable” in his role. Christoph Blocher, the party’s deputy president and former justice minister, had informed the government of the alleged insider trading and sparked the internal investigation.
The SNB Bank Council said in a statement on Jan. 7 that the central bank’s rulebook will be toughened and that external auditors will review all transactions of the three board members and their deputies in the three years through 2011. All staff “with access to privileged information” must first get approval from the bank’s chief compliance officer for currency transactions exceeding 20,000 francs ($21,000), it said.
Peter V. Kunz, head of the business law department at the University of Bern, said it’s “absolutely incomprehensible” that the relatives aren’t included in the regulations.
‘Problems’
“From a legal point of view, Ms. Hildebrand’s dollar trade isn’t problematic,” he said. “From the point of view of morality, experienced economic experts like the Hildebrands should know that a spouse’s trades are not without problems.”
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 Geneva-based Union Bancaire Privee.
As head of the SNB, Hildebrand 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 high against the euro, trading near parity.
‘Above Suspicion’
Kashya Hildebrand was born in Rawalpindi, Pakistan, to a Pakistani father and an American mother. At the age of four, she moved to the U.S. and later worked for hedge fund Moore Capital Management in New York, where she met her future husband. After moving to Switzerland, Kashya Hildebrand focused on the art business, opening galleries in Zurich, New York and Geneva. The couple has one daughter and live in Zurich.
Bank Sarasin said on Jan. 3 it fired the employee who helped pass account information to Blocher. Christoph Moergeli, a lawmaker for the Swiss People’s Party, told Tages-Anzeiger that it’s too late for Hildebrand to amend the damage, saying “this man needs to go.”
Hildebrand has “brought grave indignity upon the office and credibility of the SNB by allowing his wife to punt the foreign-exchange market,” Tim Price, who helps oversee more than $1.5 billion as director of investment at PFP Group LLP in London, wrote in a report. “Whether he or his wife is guilty of insider dealing is beside the point. The point is that Caesar’s wife must be above suspicion.”
--With assistance from Simeon Bennett in Geneva and Mark Gilbert in London. Editors: Simone Meier, Fergal O’Brien
To contact the reporter on this story: Klaus Wille in Zurich at kwille@bloomberg.net
To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net
