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Taxpayers get CHF1 billion via federal, cantonal budget boosts

ZURICH, SWITZERLAND – Swiss federal and cantonal budgets look set to receive some CHF1 billion from the Swiss National Bank, which expects to end 2011 with a profit of CHF13 billion. A little over one-third of the profit, CHF5b, is thanks to the meteoric rise of the price of gold during the year. The other CHF8 billion is due to foreign currency positions.

The consolidated result for the year is “likely to be somewhat better” as UBS repays its 2008 bailout debt through what is called the stabilization fund.

The other CHF12b will be distributed roughly as follows:

• allocation to provisions for currency reserves, CHF3.2 billion
• CHF5b to fill the gap in the distribution reserve that goes to the Confederation and the cantons
• remaining profit to the distribution reserve.

Definitive figures and details, including movements in foreign currency positions during the year, will be released 8 March.

SNB chairman Philipp Hildebrand, who resigned following a scandal over dollars purchased by his wife, has been praised this week by a number of financial leaders outside Switzerland for his exemplary work as a central banker. EU Central Bank President Mario Draghi told a Frankfurt press conference 11 January that “we all regret the developments that led to Mr Hildebrand’s resignation because I think we will miss a very, very good central bank governor.”

Ed. note: The Financial Times has published a commentary on the implications for European financial leadership of Hildebrand’s tenure at the SNB (free, registration required)