SNB’s Hildebrand Sets Sights on ‘Sacred Cows’ of Swiss Banking
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By Simone Meier and Klaus Wille
Dec. 9 (Bloomberg) -- Philipp Hildebrand, hedge fund manager turned central banker, is setting his sights on the dangers posed by UBS AG and Credit Suisse Group AG to the Swiss economy.
Hildebrand, who takes the helm of the Swiss National Bank next month, is pushing what he calls a “no-more-taboos” stance after decades in which Switzerland’s banks were treated more with reverence than regulation. A year after the financial crisis forced a government bailout of UBS, the 46-year-old is signaling a willingness to be tougher than foreign counterparts and that he may go as far as to break up a bank if needed.
“He doesn’t respect any sacred cows,” said Janwillem Acket, chief economist at Julius Baer Holding AG in Zurich, who has known Hildebrand since the 1990s. “His chances of succeeding are very good and should be taken even more seriously as SNB president. He’s got the ideal background, a strong personality and an excellent network.”
Credit Suisse and UBS have assets six times the size of the economy, a source of unease for a country that relies on the perception of stability to attract wealthy investors. While banks have indicated they’ll fight any laws putting them at a disadvantage, Hildebrand has said that the size of the Swiss financial sector doesn’t only call for faster but also stricter rules in the Alpine nation.
“We must accept that not all countries are confronted with the same urgency for reform as Switzerland,” Hildebrand said on Nov. 18. “Agreeing on an international common denominator of regulatory reform may turn out to be insufficient for the Swiss case.”
Policy Meeting
The SNB, which tomorrow holds its last policy meeting under President Jean-Pierre Roth before Hildebrand takes over on Jan. 1, will probably keep its key rate at 0.25 percent, according to all 16 economists in a Bloomberg News survey. The bank will release its decision at 9:30 a.m. in Zurich.
Hildebrand, who previously worked for hedge fund company Moore Capital Management, also faces the challenge of withdrawing unprecedented stimulus measures without derailing an economic recovery from the worst slump in over thirty years or stoking inflation. As the economy recovers, the SNB may phase out its purchases of foreign currencies aimed to keep the franc from appreciating.
“They’ll maintain their pragmatic stance,” said Alexander Krueger, head of capital-market analysis at Bankhaus Lampe KG in Dusseldorf, Germany. “They’ll wait and monitor economic developments while keeping an eye on the franc.”
Outspoken
Hildebrand, a former national swimming champion, has already used his authority to toughen regulation at home. In the weeks following the collapse of Lehman Brothers Holdings Inc. in September 2008, he helped avert a near collapse of UBS and forced the country’s two largest banks to raise capital buffers.
The central bank and the financial-market regulator work jointly on banking stability. As the crisis unfolded, Hildebrand has become the most outspoken advocate of more robust regulation to prevent a further crisis, stressing concerns about banks that are “too big to fail.”
Still, regulators have yet to tackle this issue and Credit Suisse and UBS have voiced resistance.
“The solution can only be a global one” and national approaches “are prone to have negative influences,” UBS Chief Executive Officer Oswald Gruebel said on Nov. 17. Hans-Ulrich Meister, head of Credit Suisse’s Swiss business, said two weeks later that regulators must “slow down” as other countries are just paying “lip service” to regulation.
‘Tooth and Nail’
“The drastic suggestions, such as for example the possible splitting up” of banks “will meet strong resistance,” said Manuel Ammann, a professor of finance at the University of St. Gallen. “They will fight against it tooth and nail.”
Born in Bern, Switzerland, Hildebrand went to school in Zurich and studied in Toronto before getting a doctorate from the University of Oxford in 1994. He narrowly missed qualifying for the Swiss Olympic swimming team in 1984.
“He was a real workhorse,” said Anthony Ulrich, Hildebrand’s former swimming coach. “We used to have training sessions at 6 a.m. and then again in the evening.” Even though he often went back to work after late training, “he never failed to show up the next day.”
As a student, Hildebrand worked as an assistant to executives and policy makers at the World Economic Forum annual conference in Davos, Switzerland, where he is now a regular attendee.
He joined Moore Capital in 1995, where he was first in charge of strategy for Europe and fixed income before being made partner in 1997. He was appointed chief investment officer at Vontobel Holding AG in Zurich in 2000 and joined Union Bancaire Privee the following year, where he led the investment strategy.
“UBS and Credit Suisse would probably prefer to have Hildebrand on their own executive floor rather than at the head of the SNB,” says Hans Geiger, Professor Emeritus of Banking at the University of Zurich. “It would make their life a whole lot easier.”
To contact the reporters on this story: Simone Meier in Zurich at smeier@bloomberg.net; Klaus Wille in Zurich at kwille@bloomberg.net.
Last Updated: December 8, 2009 19:01 EST
