Swiss central bank slumps to £6bn loss (Jan 2014)


Source: The Telegraph – Swiss central bank slumps to £6bn loss

Notable excerpts:

Switzerland may be famed for its banking skills but the country’s central bank has found itself in the embarrassing position of having to post an annual loss.

The plunging gold price means the Swiss National Bank (SNB) lost billions last year and will not pay out its annual dividend to the country’s regions.

The SNB said that it expects to post a Sfr 9bn (£6.1bn) loss for 2013 largely because of the precious metal’s near 30pc decline over the year – its biggest annual drop in 30 years.

The Zurich-based institution holds 1,040 tons of gold and last year’s fall – from a high of $1,700 an ounce in January – wiped Sfr 15bn off the reserves.

The writedown was partially offset by a Sfr 3bn gain on the SNB’s foreign currency positions and a Sfr 3bn boost from the sale of the stabilisation fund it set up at the height of the financial crisis to save UBS, Switzerland’s largest bank, from failing.

“As this loss will be substantially larger than the Sfr 5.3bn in the distribution reserve, the SNB cannot make a profit distribution,” the bank said.

The bank, which is listed on the Zurich stock exchange, is 55pc owned by public institutions, including cantonal governments and banks.

The remaining portion is largely owned by private investors. The federal government does not hold any shares.

The SNB usually hands out dividends to the Swiss Confederation and the 26 regional cantons, if the distribution reserve isn’t negative after profits have been appropriated.

Last year, the SNB reported a Sfr 6.9bn profit and redistributed Sfr 2.4bn of this to investors.

Thomas Jordan, SNB president, told Swiss television station SRF: “We’ve warned the budget chiefs over the past two years that we have a big balance sheet with lots of risk, and that it’s to be expected that we have years with big profits and years with big losses – and that its entirely possible that we aren’t able to make a payout.”

The bank is due to announce full results on March 7.


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