Thomas Jordan confirmed as National Bank head

Thomas Jordan has been holding the fort at the SNB since January Reuters

The Swiss cabinet has confirmed the appointment of Thomas Jordan as head of the Swiss National Bank, three months after he took over in an acting capacity.

The move comes weeks after the Swiss franc temporarily fell below the central bank’s SFr1.20 exchange rate floor against the euro.

Seven months ago Jordan’s predecessor, Philipp Hildebrand, had staked the credibility of the SNB on checking the inexorable rise of the franc against the single currency.

The central bank has repeatedly vowed that it will do whatever it takes to defend the exchange rate floor and that it will not tolerate any efforts by the markets to destabilise its policy.

At a media conference in Bern on Wednesday, Jordan stated that he was committed to maintaining the bank’s exchange rate floor policy.

“I stand for continuity. The minimum limit for the Swiss franc against the euro is absolutely necessary in this economy. The entire board is fully committed to this exchange rate floor,” Jordan said, adding that the bank would defend this minimum limit regardless of what happened on the financial markets.

The markets have been watching for any signs of weakness since Hildebrand was forced to step down as head of the SNB in January following a controversial currency trade by his wife last year.

Asked about the Hildebrand affair, Jordan said: “We lost a very good colleague. In future we will do everything in terms of compliance-organisation to define the processes so that there will be no more problems.”

  

The Swiss financial sector and exporters will be hoping that Jordan’s permanent appointment to the role will be viewed as a sign of renewed strength and stability at the central bank.

Solid reputation

The 49-year-old from Biel enjoys a solid reputation after joining the SNB in 1997 and climbing up through the ranks. He has a largely academic background; he received his doctorate from Bern University and did postgraduate work at Harvard.

Before his appointment, Jordan headed the financial markets unit and for the past two years oversaw the regulatory department, which is pushing for flagship banks UBS and Credit Suisse to solidify their balance sheets.

Jordan is also an honorary professor at Bern University, chairman of the SNB’s Study Center Gerzensee Foundation and chairman of the International Center for Monetary and Banking Studies (ICMB) in Geneva.

Standing almost two metres tall, Jordan is another giant at the central bank, surpassing his former colleague by a few centimetres.

According to a banking specialist cited in the German-language newspaper Der Bund, the new president embodies “typical Swiss characteristics” and is expected to be more restrained than Hildebrand.

Other appointments

Also on Wednesday, the government appointed Jean-Pierre Danthine as vice chairman of the governing board – effective immediately; he will be responsible for the areas of financial stability, cash, finance and risk.

In addition, the government named Fritz Zurbrügg, currently director of the Federal Finance Administration, a member of the bank’s governing board.

Starting in August, Zurbrügg will manage the department handling financial markets, banking operations and information technology. Until then, alternate board member Dewet Moser will act as interim head.

The government also appointed new members to the bank’s council: Christoph Lengwiler and Shelby du Pasquier.

They will replace bank president Hansueli Raggenbass, who opted not to run for re-election after the Hildebrand affair, and Fritz Studer, who announced his resignation in October 2011.

Lengwiler and du Pasquier will serve from 2012-2016.

Welcome choice

Business, industry and political leaders lined up in support of Jordan’s appointment on Wednesday.

Director of Swiss Business Association, economiesuisse, Pascal Gentinetta said Jordan fulfilled the necessary criteria and had all the qualities necessary for the position.

“We are convinced that the Swiss National Bank will continue to exercise its mandate in the best conditions,” Gentinetta said.

Umbrella group for the mechanical and electrical engineering sector, Swissmem, welcomed Jordan’s assurance that the franc floor would be maintained, saying it was vital for safeguarding the future of Switzerland’s export manufacturers.

The Swiss Bankers Association also applauded Jordan’s assurances that the bank’s policy on the franc would remain unchanged. Spokesman Thomas Sutter said Jordan was a competent choice who had done a good job as acting chairman since Hidlebrand’s resignation in January.

Switzerland’s political parties united behind Jordan’s appointment with the Radicals, Christian Democrats and People’s Party on the right, as well as the Social Democrats on the left issuing statements of general support.

Thomas Jordan

Born in Biel in 1963, he studied economics at Bern University. In 1993 he completed a PhD on European currency union. He also carried out research and lectured at Harvard University for over three years.

In 1997 he began work as an economic advisor at the SNB. In 1997 he became deputy director of the economic studies department and in 2002 took over as head of the research department.

In 2004 he was appointed a director and took charge of the financial markets department. In 2007 the Swiss cabinet appointed him as a member of the executive board and in 2010 he became vice president.

Jordan is also vice president of the stability fund and chairman of the Central Bank Counterfeit Deterrence Group of the G-10.

He is married and has two sons.

The Hildebrand Affair

At the end of 2011, a rumour reached the media that SNB chairman Philipp Hildebrand had used his insider knowledge for personal gain. First the media reported that the financial affairs of the Hildebrand family had been investigated by auditors and given the all clear.
 
Then details started emerging about an advantageous currency trade made by Hildebrand’s wife Kashya – a Swiss-American dual national. The implication was that she had inside knowledge about the bank’s plans to weaken the franc.
 
This was followed by revelations in some papers that the source of the information about the Hildebrands’ accounts was none other than Christoph Blocher, former justice minister, and deputy chairman of the right wing People’s Party. It turned out that he’d got the information from an employee of Sarasin Bank.
 
The next bombshell: the Weltwoche weekly magazine, which is close to the People’s Party, announced that it had “proof” that Philipp Hildebrand himself, not just his wife, had indulged in insider dealing.
 
Hildebrand first denied any wrong doing and rejected calls for his resignation. Then on January 9 he resigned after realising he could not prove that he had been unaware of his wife’s transactions.