The head of the Swiss central bank resigned yesterday in an attempt to end the foreign currency trading scandal that has shaken the institution.
Philipp Hildebrand has been under pressure to quit since it emerged last week that his wife had carried out a private currency trade which, just three weeks later, turned a huge profit when her husband authorised a massive intervention in the foreign exchange markets which sent the Swiss franc plummeting.
He had fought desperately to keep his job, and only last Thursday survived a grilling by the media. But yesterday he admitted that there was no way he could prove that his wife acted without his knowledge.
The Bank of England Governor, Sir Mervyn King, paid tribute to his "total integrity" and courage, in an emotive statement that appeared to hint that the Swiss may regret what has been seen in some quarters as a politically driven witchhunt.
Mr Hildebrand said: "The fact is: my word is my bond. I had no knowledge of my wife's transaction on that day... I am sad to take this step. I loved this job, I fought like a lion for it."
His wife, the art gallery owner and former banker Kashya Hildebrand, had bought $418,000 with Swiss francs at a time when the Swiss currency was seen as being way too high for the good of the economy.
Mr Hildebrand then went on to lead the decision to cap the "Swissie" in a move that saw it plummet in value instantly. It was the first such cap since the 1970s.
The famously cosy Swiss banking fraternity has rallied around Mr Hildebrand, backing his claim that the two events were purely coincidence. Its only real action so far has been to sack the whistleblowing private banker who spilled the beans on the transaction to a right-wing politician.
His wife had added to his denials of any impropriety, saying she had believed for a long time before the trade that the dollar was "at a record low and almost ridiculously cheap".
Sir Mervyn, speaking in his capacity as chairman of the Central Bank Governors in Basel, said last night: "I speak for all my colleagues when I say that we are saddened by Philipp Hildebrand's departure... We all know that he is a man of total integrity, extraordinary ability and, most important of all, courage. Such people are rare. His country will miss him."
While Swiss bankers were more outraged at the publication of his family's personal financial details, the wider population and political community were angry at the way he had jeopardised the integrity and credibility of his position. Swiss public opinion has become jaded with bankers since the crisis and the massive losses at UBS.
Mr Hildebrand joined the central bank in 2003, becoming its youngest-ever policymaker, and took over as president in 2010. He had a reputation as being a tough regulator, cracking down on banks after Lehman Brothers fell.
The interim chairman, Thomas Jordan, said he was willing to take on Mr Hildebrand's job permanently,if offered.
top bankers who toppled
Rupert Pennant-Rea, 1995
The glittering career of the deputy governor of the Bank of England was brought to a crashing end in 1995 by the kiss-and-tell of a spurned lover, Mary Ellen Synon. Remembered forevermore as the "Bonk of England", Ms Synon described how she and Rupert had done the deed on the carpet of governor Sir Eddie George's robing room. The late "Steady" Eddie reportedly had the offending floor covering cut to shreds.
Ernst Welteke, 2004
Ernst Welteke resigned from Germany's Bundesbank after a scandal involving a hefty hotel bill, a night on a corporate yacht and a breakdown of relations between German politicians and the central bank. First, it emerged that a bank he was supposed to be regulating paid for a four-night stay in a Berlin hotel. Then it came to light that he enjoyed a night, gratis, on a BMW-chartered yacht during the Monaco grand prix. Not wise when BMW runs its own private bank.
Carlos Massad, 2003
The president of the Bank of Chile, Massad's downfall began when his personal secretary, Pamela Andrada, was arrested for flogging market-sensitive information to an investment bank. To his credit, Massad set in train new leak-busting measures at the bank, before resigning.Reuse content