SWITZERLAND’S CENTRAL bank chief is set to break his silence today over a controversial currency trade made by his wife three weeks before he imposed a cap on the Swiss franc.
Philipp Hildebrand’s decision to speak came after the sacking on Tuesday of a bank employee who leaked details of the trade to the lawyer of a political adversary.
The affair goes to the heart of bank secrecy in Switzerland, whose banks are plagued by scandals over their role in tax avoidance by the world’s wealthy. However, controversy over the actions of the central banker’s wife has been centred on the leak of her private data, not the action itself.
Kashya Hildebrand, a former trader who also owns a Zurich art gallery, told Swiss television she "felt good" about the deal last August. Local tabloid Blickreported it had yielded a 60,000 Swiss franc (€49,800) profit on a 500,000 franc trade.
“What motivated me to buy dollars was the fact that it was at a record low and was almost ridiculously cheap,” she was quoted as saying. “As I have worked in the financial and banking industry for over 15 year and always observe the markets, I felt at ease with this transaction.”
The Swiss National Bank has already investigated the trade and said last month it did not breach the letter of internal rules.
Yesterday, it bowed to political pressure and published internal trading rules for the first time – alongside a report by auditor PriceWaterhouseCoopers (PwC) on the controversial dollar purchase.
PwC said Mr Hildebrand had not known in advance about his wife’s dealings on August 15th, but that one day later, he told Bank Sarasin in an email all future dealing would need his express approval. He copied in the Swiss National Bank’s (SNB) compliance department for good measure.
His caution was well warranted. On September 7th, the SNB’s compliance department ruled there should be no repeat of such trades, the PwC report said. The Swiss franc cap was introduced on September 9th. “One could call this trade risky,” PwC said.
Swiss central bank rules, as well as those from the Bank of England and European Central Bank, put the onus on staff to refrain from unauthorised disclosures rather than on families to avoid trading.
SNB said Mr Hildebrand, a former hedge fund manager and vice chairman of the Financial Stability Board, would make an announcement tomorrow. The respected banker, credited with steering Switzerland’s banking system through the financial crisis, is expected to weather the storm, and won the backing of the government late yesterday.
In a country which prizes itself on bank secrecy, the fact the leak breached client confidentiality – and the data found its way into the hands of Mr Hildebrand’s political rival Christoph Blocher – initially took centre stage. Bank Sarasin, which said on Tuesday it had fired an IT staffer for the leak of data, apologised for the “considerable unpleasantness” caused by its employee, who turned himself over to police on Sunday.
“The bank condemns the misuse of confidential bank data for political purposes in the strongest possible terms,” it said. – (Reuters)
