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Wednesday, Jan 4, 2012 1:09 PM UTC

Report: Swiss Bank Chief Profited By Dollar Trades

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Topics: From the Wires,

GENEVA (AP) — A Swiss political weekly says Swiss National Bank chief Philipp Hildebrand personally engaged in profitable currency deals previously thought to have been conducted by his wife, a claim that could increase the pressure on him to step down.

Hildebrand has yet to comment on the case, which first became public when the SNB issued an unprompted statement Dec. 23 declaring that “rumors” of wrongdoing by its 48-year-old president were unfounded and its rules against insider trading weren’t breached.

A Swiss central bank spokeswoman, Silvia Oppliger, declined to comment Wednesday on the latest report.

The Zurich-based Weltwoche weekly said it has obtained bank statements showing that Hildebrand himself bought large amounts of U.S. dollars before selling them for profit — after his central bank depressed the value of the Swiss franc.

“We have all the bank statements showing the relevant transactions, plus a verbal assurance from a bank employee confirming that it was Hildebrand personally, not his wife, who ordered the transactions,” Weltwoche’s Deputy Editor-in-Chief Philipp Gut told The Associated Press in a telephone interview Wednesday.

Gut declined to identify the bank employee, but said he was a client adviser at Bank Sarasin. The Basel-based private bank said it has fired an IT support employee who leaked confidential information about “currency transactions by the family of the president of the Swiss National Bank.”

Gut said he didn’t known if the fired employee and the Weltwoche source were the same person.

According to Weltwoche, Hildebrand made several large dollar transactions between March and October last year.

“In March alone he bought U.S. dollars for 1.1 million Swiss francs,” the weekly said in advance of the article’s publication Thursday.

More surprisingly, the magazine claims Hildebrand also bought over half a million U.S. dollars in two transactions on Aug. 15, 2011, three weeks before the Swiss central bank that he leads set the minimum exchange rate of the euro at 1.20 francs. The surprise central bank move caused the value of the Swiss franc to instantly drop about 8 percent against other major currencies, including the dollar.

Three weeks after the SNB set the exchange rate floor on Sept. 6, Hildebrand sold his dollar holdings for a profit of 75,000 Swiss francs ($83,000), Weltwoche reported.

“It’s a classic forex speculation,” said Gut. “The only option for Mr. Hildebrand is to step down.”

The Swiss National Bank said last month that it was Hildebrand’s wife Kashya, a former currency trader who now runs an art gallery in Zurich, who bought an unspecified amount of U.S. dollars for herself and her daughter. The central bank declined to say whether she sold them for a profit, but declared that the bank’s board concluded Dec. 22 there had been no inappropriate transactions nor any abuse of privileged information.

Media commentators and lawmakers across the political spectrum have called for greater transparency from the central bank and from Hildebrand, whose unblemished image is considered crucial to the credibility of Switzerland’s small but powerful central bank.

Most central banks forbid senior officials and their relatives from engaging in personal trading where they might profit from insider knowledge about upcoming monetary policy decision. But unlike the European Central Bank, the SNB has kept its rules shrouded in secrecy. It refused Tuesday to show those rules to the AP.

Still, in an interview five years ago, Hildebrand, who was then just a member of the SNB’s board, said currency dealing was prohibited.

“We aren’t, for example, allowed to hold individual bank shares or conduct foreign exchange operations,” he told the Swiss business monthly Bilanz.

Weltwoche, which published the latest allegations against Hildebrand, is close to the nationalist Swiss People’s Party and its prominent billionaire backer, former Justice Minister Christoph Blocher.

Bank Sarasin said in a statement late Tuesday the fired IT support specialist passed details of the Hildebrands’ account to a People’s Party lawyer, who then met with Blocher.

Blocher, who has repeatedly criticized Hildebrand’s management of the central bank, said through his spokesman he had no plans to comment on the Hildebrand case.

More Frank Jordans.

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