Swiss central bank projects record loss, will skip annual government payout

SWITZERLAND’S government will not receive a payout from the Swiss National Bank (SNB) for 2022, as the central bank projects its biggest loss in its 116-year history.

The central bank said on Monday (Jan 9) that it expected an annual loss of 132 billion Swiss francs (S$190.5 billion), based on preliminary results. Of this amount, 131 billion Swiss francs would stem from collapsed valuations of the SNB’s holdings in foreign currencies, accrued as a result of decades-long purchases to weaken the franc.

The SNB lost valuations of around one billion francs for its positions in Swiss francs, while it earned about 400 million francs on its gold holdings.

This would be only the second time since its establishment in 1906 that the SNB will be skipping its yearly payment to the federal government and Swiss cantons, forcing many of the 26 administrative districts to adjust their spending plans. The institution paid out 6 billion francs for 2021.

While the loss is “regrettable”, interim earnings had suggested such an outcome, said the conference of cantonal finance chiefs.

The body added: “It’s an established fact that SNB profits fluctuate widely and distributions cannot be taken for granted.”

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Private shareholders will not receive a dividend for 2022, either. Unlike other central banks, the SNB is a publicly-traded joint-stock company, with about half the shares held by public-sector institutions and the rest by companies and private individuals.

Earnings from the SNB’s operations do not influence monetary policy. Its final results will be released on Mar 6. BLOOMBERG