By Klaus Wille and Giles Broom - Jan 4, 2012 5:10 PM GMT+0700
Jan. 4 (Bloomberg) -- Bank Sarasin & Cie. AG, the Basel, Switzerland-based private bank, said it fired an employee who passed data on currency trades by the family of Swiss National Bank Chairman Philipp Hildebrand to a political opponent. The data allegedly showed the sale of 500,000 Swiss francs for dollars by Hildebrand's wife on Aug. 15. Matthias Wabl reports from Zurich on Bloomberg Television's "The Pulse" with Maryam Nemazee. (Source: Bloomberg)
Philipp Hildebrand, chairman of the Swiss National Bank. Photographer: Daniel Acker/Bloomberg
The wife of Switzerland’s central bank president defended currency transactions she made last year as Bank Sarasin (BSAN) fired an employee after information on the trades leaked to a political opponent of her husband.
Kashya Hildebrand, a former hedge fund employee, broke her silence on the affair late yesterday by saying that she bought “almost ridiculously cheap” dollars in August to run her art gallery in the center of Zurich. Her husband, Philipp, has yet to comment on the matter.
“My interest in the dollar purchase was motivated by the fact that it was at a record low and almost ridiculously cheap,” Swiss Television’s 10 vor 10 program cited Kashya Hildebrand as saying in a statement late yesterday. She also said that she had worked in the financial industry for 15 years through 1999 before becoming an art dealer and “felt comfortable with this transaction.”
The affair cuts to the core of Swiss politics and finance. Kashya Hildebrand’s trades came about three weeks before the Swiss National Bank (SNBN) rattled currency markets by imposing a ceiling on the franc for the first time in three decades. In addition, Bank Sarasin, a Basel-based private bank, said it fired an employee who passed data on the trades to Christoph Blocher, vice president of the Swiss People’s Party, who last year called on Philipp Hildebrand to resign after the SNB’s currency transactions led to a record loss.
Dollar Purchases
While Kashya Hildebrand argued that the purchase was business-related, Tages-Anzeiger newspaper today said that the money for the dollar purchase came from the sale of a holiday home in Gstaad, Switzerland, citing a person close to Philipp Hildebrand. Weltwoche magazine said today that the SNB President had personally given the orders on currencies.
On Aug. 15, he had spent 400,000 francs to buy $504,000, the Swiss magazine reported, citing bank statements. On Oct. 4, after the currency cap was imposed, he sold them, reaping a gain of 75,000 francs, according to Weltwoche.
Silvia Oppliger, a spokeswoman at the SNB in Zurich, declined to comment. The central bank wouldn’t say whether Philipp Hildebrand will give a statement.
Sarasin Employee
Bank Sarasin late yesterday said it fired an employee who passed data on currency trades by the Hildebrand family to Blocher, a political opponent.
The employee, who wasn’t named, worked in information technology and passed the data to a lawyer, who then arranged a meeting with Blocher on Nov. 11, the bank said in the statement, citing the former employee. Livio Zanolari, a spokesman for Blocher, declined to comment.
The employee went to Zurich’s police on Jan. 1 and admitted criminal misconduct, according to the statement.
Philipp Hildebrand was informed about the allegations on Dec. 15, the day the central bank left the benchmark interest rate at zero and maintained its franc cap of 1.20 versus the euro. He then fully disclosed details about his own and his family’s bank accounts, according to government spokesman Andre Simonazzi.
Two separate investigations, by government officials and by PricewaterhouseCoopers LLP, concluded that “there was no evidence of transactions that misused confidential information or breached SNB regulations,” Simonazzi said.
‘Very Surprised’
The PricewaterhouseCoopers probe was commissioned by the SNB Bank Council, the central bank’s supervisory body, who made a similar statement on Dec. 23, exonerating Hildebrand and his family. The central bank declined to publish its rules on disclosure obligations by executives and their families, saying that these regulations are only for internal use.
Kashya Hildebrand said that 70 percent to 80 percent of financial transactions at her art gallery are in dollars.
“The day after the dollar purchase, the SNB’s general counsel was informed for the sake of transparency, and there were no objections to the transaction,” she said. “That’s why I am very surprised about the current interest in the matter.”
Kashya Hildebrand was born in Rawalpindi, Pakistan, to a Pakistani father and an American mother. At the age of four, she moved to the U.S. and later worked for hedge fund Moore Capital Management in New York, where she met her future husband, according to Tages-Anzeiger. After moving to Switzerland, Kashya Hildebrand focused on the art business, opening galleries in Zurich, New York and Geneva. The couple has one daughter and live in Zurich.
Philipp Hildebrand joined the SNB’s governing board in 2003 after being chief investment officer at Zurich-based Vontobel Group and Union Bancaire Privee in Geneva. He became SNB president in January 2010.
Billionaire entrepreneur Blocher, 71, helped to transform the Swiss People’s Party from an agrarian group to a populist anti-immigrant party. He was ousted from the Cabinet in 2007.
After the central bank amassed a record loss of $21 billion in 2010 through foreign-currency actions aimed to fight deflation and help exporters, Blocher said Hildebrand should resign, calling the moves “senseless speculation.”
To contact the reporters on this story: Klaus Wille in Zurich at kwille@bloomberg.net; Giles Broom in Geneva at gbroom@bloomberg.net
To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net
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