Tuesday, January 10, 2012

Swiss Central Bank Chairman Hildebrand Resigns


Insider Trading Suspicions

SNB Chairman Hildebrand on Jan. 5, when he broke his silence about his wife's private currency trading.

SNB Chairman Hildebrand on Jan. 5, when he broke his silence about his wife's private currency trading.

The president of the Swiss National Bank resigned on Monday amid ongoing suspicions about a lucrative currency trade made by his wife. Philipp Hildebrand said he could not prove he didn't know about the transaction and wanted to protect the central bank's reputation.

For weeks, Philipp Hildebrand had been under fire. And on Monday, he gave in to the pressure, resigning from his post as president of the Swiss National Bank (SNB).

The move, announced in a statement by the central bank, came in the wake of news of a controversial trade made by his wife, former hedge fund trader and Zurich galerist Kashya Hildebrand. She allegedly bought some 400,000 Swiss francs ($418,000) worth of dollars on Aug. 15, three weeks before her husband directed measures to cap the rise of the franc at 1.20 per euro.

In the months prior, nervous investors had fled from the franc, driving the currency exchange rate up and threatening the economy of the export-reliant country. But after the maximum rate was set, it swiftly lost value. When Hildebrand's wife sold the currency on Oct. 4, she reportedly made a profit of some 75,000 francs.

Hildebrand's resignation came as he was about to face questioning by a Swiss parliamentary committee. Not long after the bank's statement was released, he called a press conference in Bern, telling journalists that the previous weeks had been a "difficult time," but that he was proud of his previous work, which included stints at financial institutions in Switzerland and the World Bank.

"I would like to think I have been a damn good central banker," Hildebrand told reporters. "The policy of the central bank was a success in recent years."

Informant Hospitalized

Less than one week ago, Hildebrand broke his silence over the scandal with a press conference, where he denied breaking the National Bank's rules. He also announced he would donate the tens of thousand in profits made from the trade to charity. Though he had previously said he had not been aware of his wife's trade until the day after it was made, on Monday he said he could not prove this.

The confidential Monday session with members of the Committees for Economic Affairs and Taxation was meant to determine whether Hildebrand and his wife may have also made trades from accounts other than the one held at Bank Sarasin, based in Basel, used in the currency trade. Also facing the committees was head of the SNB's supervisory council, Hansueli Raggenbass, who has also come under fire in the scandal, which has authorities questioning transparency at the bank. The SNB cleared Hildebrand of wrongdoing in the matter in December.

The IT employee at Bank Sarasin who leaked details of the trade was fired last week. On Sunday news broke that the 39-year-old informant had been hospitalized after allegedly attempting suicide. In a letter to several Swiss dailies on Monday he said he had not intended for the information to go public.

Swiss National Bank Vice Chairman Thomas Jordan will temporarily take over Hildebrand's position, the supervisory council said in a statement.

kla -- with wires


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