A year without dividends and profit distribution - what are the reasons?

Jean Studer, President of the Bank Council

106th Ordinary General Meeting of Shareholders of the Swiss National Bank, Berne, 25.04.2014

The Swiss National Bank (SNB) is breaking with a long-standing tradition. For the first time since its establishment more than one hundred years ago, it cannot pay its shareholders any dividends. The Confederation and the cantons are also left empty handed, a first since the introduction of the current distribution regulation twenty years ago. This is primarily due to the fact that in the 2013 financial year, the SNB had to accept a large valuation loss on its gold holdings, which could not be offset by other earnings. The SNB also increased its equity capital by creating additional provisions, since the legislator places substantial weight on the SNB maintaining a healthy balance sheet. The annual result of CHF -12 billion also completely exhausted the distribution reserve, and consequently, no earnings remain to be paid out as dividends to shareholders or as distributions to the Confederation and cantons. Therefore, the conditions laid down in the National Bank Act (NBA) for the payment of a dividend or distribution are not fulfilled.

The SNB's character as a special-statute joint-stock company is reflected in a number of features. These include not only the limitation of dividends to a maximum of 6% of a share's nominal value, but also the restriction of SNB shareholder rights compared to those of other companies in other matters. The approval of the popular initiative against excessive remuneration (the Minder initiative), which basically strengthens shareholders' rights, does not change this. The powers of the General Meeting of Shareholders of the SNB will thus continue to be determined by the NBA. The policy on compensation, in particular, remains within the remit of the Bank Council. For years, the SNB has attached great importance to transparency in this area. The principles governing compensation, and detailed information on the remuneration of senior management, are included in the Annual Report.

Since the beginning, the cantons have been linked with the SNB in many ways. Regarding the participation in the SNB's financial result, history shows that the share of distributions in cantonal income has fluctuated strongly. Special factors in the last two decades meant that payments were very handsome. Nevertheless, the SNB has regularly emphasised that there is no guarantee for the distributions. Since the financial result is dominated by valuation changes, the SNB gives neither earnings forecasts nor profit warnings. The Bank Council will continue to adhere to a prudent provisioning policy, with the focus on ensuring the SNB's room for manoeuvre over the long term.