FRANKFURT (MNI) – Following is the text of the announcement
published Friday by the Swiss National Bank of its loss for last year in
the amount of SFR21 billion:

“The sharp rise in the value of the Swiss franc, particularly
against the euro and the US dollar, has resulted in a loss of some CHF
26 billion on the foreign currency positions of the Swiss National Bank
(SNB) for the 2010 financial year. Owing, in particular, to valuation
gains on gold (of just under CHF 6 billion), an overall loss of CHF 21
billion is expected for the parent company. The stabilisation fund will
probably contribute to a better consolidated result but, for reasons of
commercial law, this has no bearing on the profit distribution.

In the light of the exceptional circumstances, the SNB has decided
to set the allocation to the provisions for currency reserves for the
financial year just ended at CHF 0.7 billion instead of CHF 4 billion.
This will allow the profit distribution of CHF 2.5 billion for the 2010
financial year to the Confederation and the cantons, and dividends of
CHF 1.5 million, to be paid as planned. Despite the reduced allocation
to the provisions for currency reserves, the SNB’s capital base
continues to be robust, also by comparison with other central banks.

The distribution reserve, which amounted to CHF 19 billion at the
end of 2009, will now stand at CHF -5.0 billion after the loss, the
reduced allocation to provisions and the profit distribution are taken
into account. A large part of the SNB’s loss for the 2010 financial year
will be absorbed by the distribution reserve.

The SNB builds long-term equity capital by means of annual
allocations to the provisions for currency reserves. It had planned, for
the financial years 2009-2013, to increase the provisions at a rate
double that of average nominal GDP growth for the preceding five years.
The SNB will now allocate a reduced amount for the 2010 financial year.
The continuing strength of its capital base will allow the SNB to
undertake a one-off reduction in this years allocation to the
provisions for currency reserves, and make a profit distribution this
spring in accordance with the existing agreement. In so doing, the SNB
is taking into account the exceptional circumstances brought about by
the sharp rise in the value of the Swiss franc immediately prior to the
end of the year. It is thus ensuring certainty for both the
Confederation and the cantons as regards their plans for the profit
distribution from the SNB budgeted for 2011.

The events of the past year have highlighted the fact that an
adequate capital cushion is paramount for monetary policy independence.
The SNB will therefore continue to pursue its long-term strategy of
increasing its equity capital on an annual basis by means of allocations
to the provisions for currency reserves. Moreover, future distributable
profits that remain after allocations to the provisions will first have
to be offset against the negative distribution reserve. Thus, the
possibility cannot be excluded that the profit distribution will have to
be suspended for a certain period, and that the amount of future profit
distributions will be reduced. Since, for the 2010 financial year, the
SNB will once again make a profit distribution as foreseen by the
agreement, the Confederation and cantons will have time to adjust to the
new situation.

The fact that the distribution reserve has turned negative will
make it necessary to review the distribution agreement. The review will
be carried out by the Federal Department of Finance and the SNB over the
course of this year.

The SNB’s results depend largely on developments in the gold,
foreign exchange and capital markets. For the 2009 financial year, the
SNB reported a profit of CHF 10 billion. The distribution reserve was
increased by CHF 6.9 billion, while the allocation to the provisions for
currency reserves amounted to CHF 3.1 billion.

The detailed report on the annual financial statements with
definitive figures and the results for the stabilisation fund will be
released on 3 March 2011; the Annual Report will be published on 7
April.”

[TOPICS: MT$$$$,M$$EC$,M$$FX$,M$X$$$,M$$CR$,MGX$$$]