By Catherine Bosley, Reuters
BERNE–The Swiss National Bank (SNB) was set to start the search for a new board member on Tuesday after the resignation of Philipp Hildebrand as chairman over a controversial currency trade made by his wife. Hildebrand’s wife Kashya, a former hedge fund trader who now runs a Zurich art gallery, bought 400,000 Swiss francs (US$418,000) worth of dollars on Aug. 15, three weeks before her husband oversaw steps to cap the rise of the safe-haven franc. She later sold the dollars at a higher rate. The SNB’s supervisory council said on Monday Vice Chairman Thomas Jordan, who joined the SNB in 1997, would take over as chairman for the time being, with the Swiss government expected to confirm him soon in the position permanently. Jordan, who received his doctorate from the University of Berne and did postgraduate work at Harvard, headed the financial markets unit and for the past two years has overseen the regulatory department, which is pushing for flagship banks UBS and Credit Suisse to solidify their balance sheets. Jordan said on Monday he is prepared to take the top job on a permanent basis if the government asks him to do so and stressed his determination to enforce the 1.2-per-euro cap on the franc that the SNB imposed on Sept. 6.
Hansueli Raggenbass, the head of the SNB council who is also under fire for his handling of the scandal, said the body would discuss on Tuesday how to proceed on finding a new member for the three-person policy-setting board. The SNB is likely to look for another German speaker to replace Hildebrand on the governing board to complement French-speaking Jean-Pierre Danthine and German-speaking Jordan. Swiss public institutions always seek to balance representatives from the different language groups in this multilingual country. The SNB council said on Saturday it would overhaul its internal rules concerning board members’ own trading and examine all transactions they made over the past three years. The Swiss franc, which Hildebrand had fought to stop soaring on safe-haven buying driven by the eurozone debt crisis, rose slightly on the news of his departure. But the market is not seen testing the franc cap because of the upheaval. “The credibility of a central bank does not depend on one person,” said Daniel Hartmann of Bantleon Bank. “Besides, with Thomas Jordan, the SNB has an experienced person on the board. The exchange rate will be influenced more by other factors, such as the eurozone crisis.” At a news conference four days ago, Hildebrand had resisted calls to step down, saying he only learned of his wife’s trade the day after she made it. He rejected claims that he had personally authorized the currency deal. But he told reporters on Monday he could not provide final evidence that he had been unaware of the trade and had decided to step down as he realized the intense public scrutiny over the affair was compromising his credibility. The Swiss government said it hoped the SNB would be able to turn its full attention back to monetary policy. “The stability and credibility of the SNB are essential for the economy and for the good of the country,” it said in a statement.