Swiss central bank chief hailed as star quits over currency deals

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The head of Switzerland’s central bank has quit in the wake of growing criticism after he and his wife netted tens of thousands of dollars from private currency deals.

Philipp Hildebrand, a former champion national swimmer who was the bank’s youngest-ever president and chairman, said he deeply regretted the mistakes that had led to his downfall.

The move came shortly before he was due to be grilled by a Swiss parliamentary committee over deals that brought huge returns while his own bank was seeking to lower the value of the Swiss currency.

Mr Hildebrand had come under growing pressure to step down after it emerged that his wife Kashya, a former currency trader, profited last year from dollar swaps which took advantage of the US currency against the Swiss franc.

He broke his silence over the affair on Thursday, to deny breaking central bank rules and to announce he was donating profits from the deals to charity.

But he acknowledged yesterday that he could not prove his innocence as he released documents relating to the affair. He will be replaced by vice-chairman Thomas Jordan.

Mr Hildebrand said he was proud of his achievements and of working for financial institutions in Switzerland and international organisations such as the World Bank.

“I would like to think I have been a damn good central banker,” he added. “I deeply regret these mistakes as well as the entire situation.”

His departure marks a shocking fall from grace for a man who was only 47 when he landed the job last year.

He was hailed a prodigy and a champion of Swiss banking, even being described as a financial “rock star” by one publication.

“I personally advocated strongly and early for stricter capital requirements for the big banks,” he said. “The policy of the central bank was a success in recent years.”

Mr Hildebrand maintained he broke no central bank rules, but he said the chairman must be viewed as beyond reproach.

He said he could not prove that his wife was acting without his consent when she made the currency transactions on August 15 last year.

The former chairman released emails, bank telephone records and an affidavit showing he had previously told a client adviser that his wife was allowed to buy dollars.

The documents say he learned of the trade a day after his wife bought around a half-million dollars just as the dollar hit a record low against the franc and two days before the Swiss National Bank flooded the market with francs.

Mr Hildebrand said he regretted not reversing the trade. The profits from it appeared to be almost 75,000 Swiss francs ($83,000), based on the amount he later donated to charity.

“The fact is: my word is my bond,” he said. “I had no knowledge of my wife’s transaction that day.

“Unfortunately, mistakes were made in connection with these transactions.”

The parliamentary committee’s chairman, Christophe Darbelley, said lawmakers would prepare new regulations to prevent such trading.

The Swiss central bank, like most others, prohibits senior officials from engaging in personal trading where they might profit from insider knowledge about a future monetary policy decision.

However, the bank cleared Mr Hildebrand of any wrongdoing in a report in late December.

Its governing council praised him yesterday as an outstanding banker who successfully steered it through an exceptionally turbulent time as Europe’s debt crisis worsened.