Swiss National Bank hit by $15 billion second quarter loss
By John Revill
ZURICH (Reuters) – The Swiss National Bank said on Monday it lost 13.2 billion Swiss francs ($15.14 billion) in the second quarter, despite raking in interest income of nearly 900 million francs on emergency loans to Credit Suisse and UBS.
Switzerland’s central bank lent 168 billion francs to first support Credit Suisse and then ease the fallen bank’s takeover by UBS in a state-orchestrated deal in March.
The loans, which carried interest rates of up to 3 percentage points above the SNB’s policy rate, have been more than half paid back since the crisis erupted in March.
The amount outstanding at the end of June, which also includes a small amount of COVID-19 credits, was 66.7 billion francs, the SNB said.
The interest income partly reduced losses the central bank made as a result of its recent monetary policy tightening.
The SNB lost 1.88 billion francs from its Swiss franc positions during the second quarter, largely reflecting the resumption of interest payments on sight deposits.
It has also been paying interest via SNB bonds and repos as part of its operations to absorb liquidity and steer the market interest rate to its policy rate which it increased last month to 1.75%.
The SNB, like other central banks, has been raising interest rates to tackle stubborn inflation.
Hikes by the U.S. Federal Reserve, European Central Bank and others however were a major contributors to the SNB’s overall loss by pushing down the value of its huge bond portfolio.
During the second quarter, the SNB lost 8.08 billion francs on foreign currency positions of 742 billion francs it holds via bonds as well as shares such as Apple and Tesla.
The stronger Swiss franc also reduced the value of earnings from abroad when converted back to francs.
The SNB also lost 3.14 billion francs on its gold holdings in the three months to the end of June, as lower prices cut the value of the 1,040 tonnes of the precious metal it holds.
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