Swiss central bank chief to explain dollar deals

[January 05, 2012]  ZURICH (AP) -- Switzerland's central bank chief was breaking his silence Thursday over a private currency deal that appeared to net his family big profits at a time when he was spearheading efforts to lower the value of the Swiss franc.

In a bid to counter a national uproar, the Swiss National Bank said its President Philipp Hildebrand would hold a news conference in Zurich to discuss "financial transactions and events of recent days."

Swiss media say Hildebrand's appearance could make or break the 48-year-old financial prodigy who is considered key to Switzerland's success in riding out the worst of the European financial crisis largely unscathed.

"SNB's Hildebrand -- today his head is on the line," read the front page of Switzerland's mass market tabloid Blick.

The Neue Zuercher Zeitung, which is widely read in business and political circles, saw the pressure on Hildebrand growing. "It's now up to the central bank president to ensure complete transparency," the influential paper wrote in an op-ed piece Thursday.

The public furor over Hildebrand's private deals marks a fall from grace for the former champion swimmer. As recently as last week, one Swiss newspaper described him as the "rock star of the euro crisis" for keeping a cool head while Switzerland's neighbors trembled amid the turmoil affecting the euro currency.

It was Hildebrand who led the Swiss National Bank's efforts to vent steam out of Switzerland's overheating currency by setting the minimum value of the euro at 1.20 Swiss francs on Sept. 6.

When details of Hildebrand's account at the exclusive private bank Sarasin surfaced late last year, the Swiss central bank declared that its chief had done no wrong and that the case was considered closed.

But the recent drip-drip of claims -- some of them pitting Hildebrand's word against those of a magazine hostile to his leadership of the bank -- has reignited debate over the future of Switzerland's top banker.

Much of Hildebrand's defense rest on his claim that it was his wife Kashya, a former currency trader now running an art gallery in Zurich, who bought more than half a million U.S. dollars on Aug. 15 without telling her husband.

Kashya Hildebrand, a Pakistan-born U.S. citizen, told Swiss television Tuesday that she invested in the dollar "because it was at a record low and almost laughably cheap."

It is unclear whether she was aware that her husband's central bank would two days later increase the liquidity of the franc, thereby lifting the value of the dollar.

The SNB says the deal, along with two other Hildebrand transactions totaling over $1.6 million, were within the rules set for senior bank officials to prevent them profiting from insider knowledge.

That take was challenged by a senior figure in the powerful conservative Swiss People's Party.

"That those close to the central bank chief are making currency deals is an absolute no-go," Christoph Moergeli told Swiss TV. "You don't even need to put that in writing."

[Associated Press; By FRANK JORDANS]

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