Central bank cannot guarantee future payouts

The Swiss National Bank says that despite an expected loss of SF21 billion ($21.8 billion) for 2010, it will still be able to contribute to the government and cantons.

In a statement late on Friday the central bank said it would pay out, as agreed in a convention, SFr2.5 billion, a third going to the government and two thirds to the cantons. A further SFr1.5 billion would be paid in dividends.

However, the SNB warned that there was a possibility that its profit distribution would have to be suspended for a “certain time” in light of the current financial situation.

The bank last year made a loss of SFr26 billion on its foreign currency positions. 

The dividends of the SNB are important because they represent two to three per cent of the total income of the cantons.

“It’s bad news; the cantons are very worried,” commented Pascal Broulis, president of the Conference of Cantonal Governments.

He added that if the central bank income were not guaranteed the cantons would have no other choices than to reduce their services, or raise taxes or their debt.

The issue is due to be discussed at the end of the month at a meeting of the cantons and the president of the SNB, Philipp Hildebrand.