SNB Records 15 Billion-Franc Loss After Stock Market Rout - EcoFinBiz Blog

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SNB Records 15 Billion-Franc Loss After Stock Market Rout

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(Bloomberg) -- The Swiss National Bank ran up a loss of 15 billion francs ($15.3 billion) in 2018 as the global stock market rout and a rallying franc took a toll.

Equities -- including U.S. bluechips like Apple Inc. and Facebook Inc. -- make up 20 percent of the SNB’s massive holdings of foreign currencies. U.S. and European stock benchmarks fell in 2018, while the franc gained against most of its G-10 peers, leading to a 16 billion-franc loss on that portfolio alone.

The SNB’s results statement on Wednesday is a preliminary estimate and it will provide further details on March 4.

Because it has a pile of foreign exchange that exceeds the value of Switzerland’s yearly economic output, the central bank, led by Thomas Jordan, is at risk of big swings when markets get turbulent. However, any profit or loss it racks up has no bearing on monetary policy.

Nevertheless, past losses have incited criticism from politicians, and in 2013 it scrapped its government payout.

Unusually among central banks, the SNB is listed on the local stock exchange. The biggest proportion of shares is held by public institutions, including cantonal governments and cantonal banks. There are also some 2,000 private investors, who receive a dividend but whose voting rights are very limited. That dividend will be the legal maximum of 15 francs per share, the SNB said, while the total payment to the federal government and the cantons will be 2 billion francs.

The SNB also recorded a valuation loss of 300 million francs on on its gold holdings and a net result of 2 billion on its Swiss franc position, which would include income from the negative interest it charges on sight deposit accounts.

The franc gained about 4 percent against the euro last year while dropping 0.8 percent against the dollar. Those two currencies make up the lion’s share of its foreign exchange reserves.

--With assistance from Mara Bernath.

To contact the reporter on this story: Catherine Bosley in Zurich at cbosley1@bloomberg.net

To contact the editor responsible for this story: Fergal O'Brien at fobrien@bloomberg.net

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