The Swiss National Bank (SNB) reported a CHF 50.1 billion loss for the first half of 2015. The loss is largely driven by changes in the Swiss franc value of the assets it owns. The rise in the value of the Swiss franc following the dropping of the euro cap in January 2015 means foreign currency holdings are worth less in Swiss franc terms than they were before – revaluation of foreign currency holdings accounted for CHF 47.2 billion of the total half year loss.
Large foreign currency purchases were made when the bank was trying to defend the peg – the bank was frantically selling Swiss francs and buying other currencies, mainly euros, in an attempt to push down the Swiss franc’s value and maintain the peg. Some argue that dropping the cap is the main reason behind the losses, however it could also be argued that the losses are related to the large foreign currency holdings that were accumulated while attempting to defend the currency cap.
In addition, declining gold prices have eaten into the value of the SNB’s gold holdings to the tune of CHF 3.2 billion. CHF 3.9 billion was also lost on interest bearing instruments. On the positive side the SNB received CHF 3.5 billion of interest, CHF 1.2 billion of dividend income and saw the value of its equity investments rise by CHF 4.1 billion.
Unlike most central banks the SNB has diverse shareholders, which include Swiss cantons and private individuals. In good years these shareholders receive dividends. It is probably too soon to say whether the SNB will be able to pay its shareholders a dividend for 2015 however it is clear that the first half of the year has not been promising.
According to Bloomberg SNB shares (SNBN:SW) were trading lower on 31 July 2015.
31 July 2015 Swiss National Bank press release (in English)
Important note: information provided in this article does not constitute financial advice and should not be taken as financial advice.
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