Swiss National Bank Posts Record Loss Amid Massive CHF Fiasco

Swiss National Bank Posts Record Loss Amid Massive CHF Fiasco

The Swiss National Bank reported CHF 30 billion losses for the first quarter of 2015 amid the Swiss franc debacle.

The Swiss National Bank emphasized that its financial result depends largely on the developments in the gold, foreign exchange, and capital markets.  The central bank said, “Strong fluctuations are therefore to be expected, and only provisional conclusions are possible as regards the annual result.”

According to the central bank, its losses from foreign currency position were CHF 29.3 billion during the quarter. The Swiss National Bank said it recorded a valuation loss of CHF 1 billion on its gold holdings.

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Swiss National Bank exchange-rate related losses

The Swiss National Bank removed the long-standing cap of 1.20 Swiss francs per euro on January 15, 2015. Its decision surprised the markets. As a result, the Swiss franc skyrocketed but the Swiss equities dropped significantly.

Some hedge funds, pension funds and other entities including FXCM, a foreign exchange market suffered significant losses when the Swiss National Bank discontinued the cap on the CHF against the Euro. The clients of FXCM generated negative equity balances and resulted to losses of approximately$225 million

The Swiss National Bank said its decision to remove the minimum exchange rate of the CHF1.20 per euro led to exchange-rate related losses on all investment currencies. During the first quarter, its total exchange-rate related losses were CHF 41.1 billion.

According to the central bank its interest income was CHF 1.6 billion and dividend income was CHF 0.3 billion. Its price gains of CHF 3.7 billion on interest-bearing paper and instruments were driven by generally lower interest rates.

The Swiss National Bank said favorable stock market environment contributed CHF 6 billion to its net result in equity securities and instruments

Swiss National Bank gold, Swiss franc positions

The Swiss National Bank posted CHF 1 billion valuation loss on gold holding in the first quarter. The central bank said the quantity of its gold is the same. The trading price of gold was CHF 37,127 per kilogram by the end of the quarter.

According to the Swiss National Bank, its profit on Swiss Franc positions was CHF 328 million. Its profit include CHF 236 million of negative interest on sight deposit account balances since January 22,  price gains of CHF 78 million, and interest income of CHF 17 million on Swiss franc securities.

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