SNB's bank council to revise own-transaction rules

Sat Jan 7, 2012 2:13pm EST
 
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By Caroline Copley and Katie Reid

ZURICH (Reuters) - The Swiss National Bank (SNB) said on Saturday it would review its internal rules governing own-transactions made by board members as it seeks to clean up its image following a trading scandal centered on its chief.

The SNB has come under pressure to shake up its internal ethics codes after an employee of Swiss bank Sarasin leaked information that the wife of SNB chief Philipp Hildebrand had bought dollars weeks before he imposed a cap on the Swiss franc.

"It became evident that, given the events of the past few days and developments in financial markets, as well as with a view to improving transparency, taking measures is in order," the SNB said in a statement.

The central bank's credibility is crucial to its ability to defend the cap of 1.20 francs per euro at a time when heightened uncertainty in the euro zone could encourage investors to stash their funds in relatively safe Switzerland and again boost the value of the franc.

The SNB has been criticized for lax transparency after initially failing to publish its internal ethic codes, unlike other central banks.

Hildebrand told a news conference he only learned of the trade, which yielded a sizeable profit, a day after his wife's transaction and rebuffed calls by Swiss media and its largest political party to resign. He also vowed to tighten the rules for central bank employees and boost transparency.

The Swiss cabinet has said it has full confidence in Hildebrand and an external investigation found the trades did not breach internal ethics rules, which forbid currency trades within a six-month period.

But the right-wing Swiss People's Party, vocal critics of Hildebrand and the large losses run-up through SNB interventions on his watch, have called it "unacceptable" that the head of the national bank can trade foreign currency.   Continued...