Swiss bank chief faces calls to quit

The president of Switzerland's central bank was under pressure to resign yesterday after allegations that he had used insider information to reap huge profits from foreign exchange transactions before the Swiss franc was devalued and pegged to the euro last year.

The charges against Philipp Hildebrand, head of the Swiss National Bank (SNB), were made by the weekly newspaper Die Weltwoche yesterday - hours after Hildebrand's wife admitted privately using last year's soaring franc to buy US$500,000 ($635,000), which were converted back at a profit.

The bank said last month that Hildebrand's wife, Kashya, a former currency trader who now runs a Zurich art gallery, bought an unspecified amount of US dollars for herself and her daughter. The bank did not say who authorised the sale, but it said its oversight body had found no signs of improper transactions.

A report by auditors at PricewaterhouseCoopers cites emails indicating that Hildebrand learnt of his wife's decision to buy US$504,000 for 400,000 Swiss francs on August 16 - a day after the transaction occurred.

But Die Weltwoche said it had obtained bank statements showing Hildebrand had purchased large sums in US dollars in the months before his bank devalued the franc in September last year.

"In March alone he bought US dollars for 1.1 million Swiss francs," the paper said.

"It is classic [foreign exchange] speculation," claimed Philipp Gut, the paper's deputy editor in an interview. "The only option is for him to step down."

The SNB declined to comment on the allegations yesterday.

The newspaper reported that Hildebrand also bought more than US$500,000 in two transactions in August last year, weeks before the franc was devalued. It said that three weeks after the devaluation, Hildebrand sold his dollar holdings for a profit of 75,000 Swiss francs.

Gut said an employee from Bank Sarasin, the Swiss bank where the Hildebrands hold their private accounts, had told the newspaper that it was Hildebrand, not his wife, who had bought the dollars before the franc's devaluation.

Bank Sarasin revealed this week that it had sacked an unnamed employee who had breached Swiss banking secrecy laws by leaking confidential information on transactions "by the family of the president of the Swiss National Bank".

Switzerland decided to devalue its currency last year after businesses complained that its soaring value had hit exports. Tourism had also suffered as visitors were deterred by the country's high prices.

On September 6 last year, the SNB took the unprecedented step of pegging the franc to the euro at a minimum exchange rate of 1.20 Swiss francs. The surprise move caused the value of the franc to plummet.

Die Weltwoche's disclosures were the latest twist in an alleged banking scandal at SNB which has gripped Switzerland since shortly before Christmas when, in an apparent attempt to quell rumours about its head, the bank disclosed that Kashya Hildebrand had bought unspecified amounts in dollars for herself and her daughter on a purely private basis.

SNB later issued an unsolicited statement insisting that rumours of wrongdoing by Philipp Hildebrand were unfounded and the bank's rules against insider trading had not been breached.

The disclosures about Kashya Hildebrand's dollar purchases nevertheless prompted a media storm, which her public statements seemed designed to defuse.

- Independent