The Swiss Bankers Association said its central bank’s surprise
decision to cut interest rates and pump CHF50bn into the Swiss
economy was a ‘necessity’ but it remains neutral on the impact it
will have on private banks.
The Swiss National Bank (SNB) said it was cutting the target
range for the three-month Libor from 0.00–0.75% to 0.00– 0.25% and
expand bank deposits at the SNB from CHF30bn-CHF80bn.
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“The SNB is keeping a close watch on developments on the foreign
exchange market and will take further measures against the strength
of the Swiss franc if necessary,” it said in a statement.
Safe haven burden on banks
The Swiss currency has become a key save haven for international
investor which has stung private banks, as overseas profits have
been eroded and cost bases have increased by its rising value.
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By GlobalDataA Swiss Bankers Association spokesperson said it understood the
measures taken by the SNB and remains a neutral position towards
this action.
“We think that from financial policy point of view the measure
was a necessity,” the SBA spokesperson said.
No let up in sight
Coutts’ Swiss-based head of investment strategy, Jean-Maurice
Ladure, said the strength of the Swiss franc was likely to hurt
exporters’ profits this year, with negative implications for the
Swiss economy and equities.
Coutts said it did not expect a significant depreciation that
would feed through to stronger export growth, which means continued
tough times for private banks.
