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Forex trade e-mails cast doubt on SNB's Hildebrand

Swiss National Bank Chairman Philipp Hildebrand arrives in front of the Swiss National Bank building (back) for a news conference in Bern January 9, 2012. Hildebrand resigned with immediate effect.


The supervisory council of the Swiss National Bank forced Philipp Hildebrand to step down as chairman after e-mails about a currency trade by his wife failed to clear him of involvement in the deal, newspapers reported on Tuesday.

Mr. Hildebrand's wife Kashya, a former hedge fund trader who now runs a Zurich art gallery, bought 400,000 Swiss francs ($418,000 U.S.) 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.

Mr. Hildebrand quit his post on Monday, saying he could not provide final evidence that he had been unaware of the trade and that the intense public scrutiny over the affair was compromising his credibility.

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Only last week, he resisted calls to step down, saying he only learned of his wife's trade a day after she made it.

E-mails between Kashya, Hildebrand and their Sarasin bank client adviser Felix Scheuber released by the SNB on Monday showed the central banker had been involved in discussions on a dollar trade but left it unclear whether he had approved it.

After examining the e-mail exchange, the SNB's advisory council indicated to Mr. Hildebrand on Saturday that his position was no longer tenable, two Swiss newspapers reported. The SNB declined to comment on the reports.

"One had to say in the interest of the national bank that given the documents that had just surfaced there was nothing more that could avert a resignation," the TagesAnzeiger daily quoted one unnamed member of the council as saying.

One member of the bank council who declined to be named did not directly confirm the report but noted that Mr. Hildebrand had failed to thank the bank council at his farewell news conference.

Jean-Pierre Roth, the former SNB chairman who handed over to Mr. Hildebrand two years ago, said his successor should have reversed the trade as soon as he became aware of it.

"He knew that several days later he would change monetary policy which would affect the franc exchange rate," Mr. Roth told daily Le Temps. "He made a serious error of judgment unfortunately and today he must pay the consequences.

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"In a very difficult economic and monetary environment, the credibility of the SNB has been hurt, the bank is weakened."

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 government expected to confirm him soon in the position permanently.

Mr. Jordan, who enjoys a solid reputation, heads the SNB's regulatory department, which is pushing for flagship banks UBS and Credit Suisse to firm up their balance sheets.

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