January 8, 2012 / 11:50 PM / 7 years ago

SNB chief to face grilling over currency scandal

ZURICH (Reuters) - Embattled Swiss National Bank Chief Philipp Hildebrand faces a grilling by a parliamentary committee on Monday about a controversial currency trade made by his wife three weeks before he imposed a cap on the soaring Swiss franc.

Swiss National Bank (SNB) Chairman Philipp Hildebrand leaves after a news conference in Zurich, January 5, 2012. REUTERS/Christian Hartmann

Hildebrand has been fighting allegations of wrongdoing after an employee of the bank used by his family leaked details of the trade to the lawyer of a political adversary.

Hildebrand’s wife Kashya, a former hedge fund trader who now runs a Zurich art gallery, bought 400,000 Swiss francs worth of dollars on August 15, three weeks before her husband oversaw steps to cap the rise of the franc.

Alongside the head of the SNB’s bank council, Hansueli Raggenbass, Hildebrand will answer question from parliament’s economic committee about the affair, which has threatened to tarnish the central bank’s credibility.

Shaking off critics’ demands that he stand down, Hildebrand told a news conference last week he only learned of the trade the following day, rejecting claims by the Swiss magazine Weltwoche that he had personally authorized the currency deal, which made a sizeable profit.

Swiss newspapers published extracts of emails on Sunday appearing to confirm that it was Hildebrand’s wife who initiated the transaction.

“In future you are no longer authorized to carry out such currency trades, unless the request comes from me or I confirm it,” Swiss papers quoted Hildebrand as saying in an email sent to his wife and her account manager on learning of the trade.

Swiss media said he was expected to present the emails to the parliamentary committee.

The scandal has raised questions about transparency at the central bank, which initially failed to publish its internal ethics codes, saying auditor PricewaterhouseCoopers (PWC) had investigated the trade and found there had been no misuse of privileged information.

Responding to criticism that its regulations were too lax, the SNB said on Saturday it would overhaul its internal rules and examine all transactions made by board members over the past three years.

A former chief economist at the SNB said the rules must also apply to close relatives of board members. “If I were in Mr Hildebrand’s position, I would definitely not trade currencies, nor shares,” Georg Rich told the NZZ am Sonntag newspaper.

The affair cuts to the heart of Switzerland’s cherished banking secrecy, which has come under attack in recent years as cash-strapped governments crack down on banks shielding the world’s wealthy from the taxman.

Reporting by Caroline Copley; Editing by Tim Pearce

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