Tags: SNB | Chief | Quits | Scandal

Swiss Bank Chief Quits Over Currency Scandal

Monday, 09 January 2012 09:04 AM

Swiss central bank chief Philipp Hildebrand resigned on Monday in the face of growing criticism of a controversial currency trade made by his wife in August.

His resignation came as he prepared to face Swiss parliamentarians in the aftermath of the scandal, and as the bank employee sacked for leaking news of the trade was reportedly committed to a psychiatric clinic after a suicide attempt.

The Swiss franc rose as the Swiss National Bank announced Hildebrand had gone.

"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."

Hildebrand has been fighting allegations of wrongdoing since details of the trade, made just weeks before he capped the soaring franc, were leaked to a political rival.

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.

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.

Hildebrand had been due to appear before the a parliamentary committee in the afternoon 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.

"For me, the absolutely key question is whether the central bank is still credible and can keep the cap on the franc," said

Social Democrat parliamentarian Susanne Leutenegger Oberholzer.

"The central bank code will have to be revised to forbid forex trades. I think that sharpening applies to family members as well," she said.

Christoph Darbellay, the Christian Democrat chairman of parliament's economic committee, said it would be focusing on whether the Swiss National Bank should tighten its rules.

"We are not a court, just a parliamentary commission. I think we're going to be talking about the future; is there a need to change the code? In principle they (the trades) were according to the rules," he told reporters earlier.

Hildebrand was last week resisting calls to step down, saying he only learned of his wife's trade the day after she made it and rejecting claims by the Swiss magazine Weltwoche that he had personally authorized the currency deal.

Darbellay said the meeting would also be looking into the breach of Switzerland's cherished banking secrecy by the whistleblower and the SVP 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 political adversaries from the right-wing Swiss People's Party (SVP), was quoted on Monday saying he had never wanted the private bank details made public.

In comments published before the resignation was announced, he said Hildebrand should stay.

"I wanted to achieve clarification and not an issuing of data," he wrote in a letter sent to several Swiss dailies. "I think it would be good if he (Hildebrand) stays in office."

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."

The psychiatric clinic where Tarnutzer was reportedly admitted declined to comment.

© 2020 Thomson/Reuters. All rights reserved.

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Monday, 09 January 2012 09:04 AM
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