The departure of Philipp Hildebrand as chairman of the SNB has highlighted broader questions in Swiss corporate governance.

The dust has settled on Philipp Hildebrand’s resignation from the Swiss National Bank (SNB). But even as Switzerland’s slickest banker becomes history, serious questions remain about credibility and governance in one of Europe’s most important capital markets.

First the background. In late December, rumours emerged Mr Hildebrand had profited from trading the US dollar. During 2011, the SNB had struggled to restrain the Swiss franc, ultimately on September 6 setting a ceiling for the currency, which had become ever more attractive as a haven.

Investigators cleared Mr Hildebrand, although one trade by his wife was considered “delicate” (heikel). But when the allegations, including a print out of his bank account, became public, matters turned serious. Mr Hildebrand had not reversed the most controversial trade and struggled to prove he had been unaware of his wife’s actions. Ultimately, he had to go.

That a top Swiss banker should be unseated by a breach of hallowed bank secrecy (the account details were leaked by a computer man at Bank Sarasin, the Hildebrands’ bank) was a body blow to Swiss prestige.

Media reports even suggested the Hildebrands’ trades had been discussed openly by Sarasin staff – hardly ideal publicity for a Swiss private bank. And the employee concerned should, of course, have approached his bank’s compliance officer or the police, rather than handing material to a politically motivated friend.

Such issues are decisive for Switzerland, a top European financial centre with a reputation not just for efficiency and reliability, but high moral standards. Governance is monitored closely by fund managers. Apart from its big banks and bourse, Switzerland hosts a growing breed of hedge funds, dozens of big family offices and has thousands of wealthy private investors, apart from more obvious institutions like pension funds and insurance companies. That a scandal should involve the country’s central bank makes matters even worse. Inquiries after the Hildebrand affair highlighted problems with governance at the SNB itself – an institution that should be above all suspicion.

The SNB is supervised by its council (Zentralbankrat). Most members are regional politicians and cantonal bank heads – representing the SNB’s majority owners – along with some academics. Although a federal institution, the government is responsible only for naming the SNB’s chairman and deputy chairman, based on names from by the council.

In the wake of the affair, an expert committee has been created to examine improvements to that structure. Such work is paramount, considering the central bank is the one institution that must above all demonstrate unimpeachable integrity.

Switzerland central bank is unusual, though not unique, in being a quoted company. Curiously, however, individual SNB shareholders were silent during the affair, and have taken a clear second place to Bern in pushing for change.

Shareholder activism has been on the rise in Switzerland, thanks to small bodies like Ethos and Actares. They have defended small shareholders’ rights at big groups like Nestlé and Novartis, demanded greater transparency and, in finance especially, pressed for a greater say on pay and appointments. Sadly, the lobbies were silent on the SNB. Let us hope the aftershock of the Hildebrand affairs encourages them to speak louder in future.

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