SNB Chief Exits After Decade of Market and Bank Drama

(Bloomberg) — Thomas Jordan will leave the Swiss National Bank later this year after more than a decade as president, ending an era where his institution was at the heart of currency and banking turmoil that rippled around the world.

Switzerland’s longest-serving central bank chief since World War II, the 61-year-old native of Biel in the country’s northwest will step down in September. An SNB spokesperson declined to comment on who could succeed Jordan; given past practice, Vice President Martin Schlegel is a likely candidate.

Whoever does get the job will take charge of an institution that remains pivotal in managing one of the world’s most-traded currencies, and that has navigated the recent inflation surge while avoiding the worst of consumer-price increases seen elsewhere.

Jordan’s departure is nothing short of seismic for Switzerland. He is one of its best-known and most influential public officials, having steered the economy through the euro-area debt crisis, removed the cap on the franc in January 2015, adopted the world’s lowest interest rate, and driven the response to the Credit Suisse crisis last year.

A towering figure at the SNB itself, his dominance of a highly conservative institution had begun to trouble some of the country’s political class in recent years. Consequently, the president’s exit will also leave a gaping hole for his successor to fill.

“Jordan did a superb job and will be very difficult to replace,” said Karsten Junius, chief economist and head of economic and strategy research at Bank J. Safra Sarasin in Zurich. “But maybe the end of his era is also a chance to broaden decision making at the SNB.”

A Harvard-educated economist and career SNB official who took charge in 2012 when former president Philipp Hildebrand quit in the midst of a currency-trading scandal, Jordan’s tenure saw plenty of turbulence too. 

With Europe’s debt crisis raging just beyond Switzerland’s borders, he held to the currency ceiling imposed by his predecessor until an unstoppable flow of money pouring into the franc forced him to abruptly abandon the policy in 2015, causing global market ructions. 

Last year, Jordan was once again in the eye of the storm as Credit Suisse floundered after banking turmoil spread from the US, and oversaw its rescue takeover by UBS. The legacy there is that the financial system of one of Europe’s smaller countries is now dominated by a mega bank.

Under his leadership, the SNB also aggressively raised rates even before the European Central Bank did so in 2022, and then ended years of negative borrowing costs. The SNB is expected to start cutting them again later this year, though analysts don’t yet see a move at its next scheduled meeting in March.

While the departure is a surprise, it’s not uncommon for SNB presidents to step down of their own accord in a country where there are no term limits for central bank chiefs. His tenure was previously thrown into question in 2021 after he temporarily stepped back from his duties for medical reasons.

“Having met the various challenges of recent years, now is the right time for me to step down,” Jordan said in the statement. 

Later, speaking at a press conference in Zurich, the president hinted that he might have wanted to leave earlier, if things hadn’t got in the way.

“Challenges in past years, including Covid, the war in Ukraine and the crisis at Credit Suisse prevented me from resigning,” Jordan said. “Having successfully restored price stability and ensuring price stability, this situation has now changed.”

The outgoing chief declined to comment on who should succeed him, and added that he has no plans about what to do next.

As with Jordan himself, it’s been common in the past for the vice president to take the top job. Schlegel currently holds that role, putting him in pole position. The other member of the rate setting panel is newly appointed Antoine Martin.

• For full story on potential successors, click here

The move also reopens the matter of succession at an institution that lacks diversity. Andrea Maechler, the only woman to serve on the governing board, left last year to join the Bank of International Settlements. The departure means all three members of the SNB’s top echelon will have served for less than two years.

“His two colleagues on the Governing Board have hardly been in office for long — this makes it even more difficult to read the monetary policy course from statements of SNB officials, which are already rare compared to other central banks,” said Raiffeisen Switzerland economist Alexander Koch.

–With assistance from Fergal O’Brien and Angela Cullen.

(Correct to specify that Jordan is longest-serving president since World War II in second paragrah)

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