On 9 January 2023, the Swiss National Bank (SNB) announced it had made a loss of CHF 132 billion over the course of 2022. Despite the near certainty of the losses and the resulting absence of SNB payments to cantons, a number of cantons included the extra revenue in their budgets, reported RTS.
The SNB has made payments to cantons for around a decade and so adding the windfall had become routine. However, some might argue the last decade of SNB profits has been the exception rather than rule.
Economist Paul Dembinski told RTS that while the SNB is an unusual company it is never the less a corporation. If its equity shrinks from CHF 200 billion to CHF 60 billion we must ask questions. At this point we are heading towards a key threshold, he said.
If the SNB ended up with negative equity it might need to be recapitalised. Certain parties could be called on to contribute, including the federal government, and possibly to a certain extent the cantons. In such a case cantons would be hit twice, once from missing out on the accustomed income and again from needing to provide funds to recapitalise the bank.
As the adage goes, in the world of finance there’s no such thing as a free lunch.