Swiss National Bank warns it will swing to a loss for the year

 
City A.M. Reporter
THE SWISS National Bank said it would swing to a SFr9bn (£6.1bn) loss for 2013 due to a dramatic drop in the value of its gold holdings.

The SNB said a SFr15bn loss on its gold holdings, which lost 28 per cent of its value last year, could not entirely be offset by a gain of roughly SFr3bn from foreign currency and profits of more than SFr3bn from selling a stabilisation fund set up five years ago to bail out UBS during the financial crisis.

The loss is likely to be politically charged as it means the central bank cannot distribute dividends to its biggest shareholders, Switzerland’s 26 cantons, or states, or to the federal government.

The right-wing Swiss People’s Party (SVP) is forcing a referendum to require the SNB to hold at least 20 per cent of its assets in gold, something the central bank said is misguided.

Last year, the SNB relied on gains from large foreign currency positions it had accumulated to defend the 1.20 per euro ceiling it imposed on the Swiss franc in September 2011, as well as a gold price rally, to post a SFr6bn profit. More detailed results are due in March.