110th Ordinary General Meeting of Shareholders of the Swiss National Bank, Berne, 27.04.2018

The record profit which the Swiss National Bank (SNB) posted for 2017 and the sharp increase in its share price in the past months have attracted a good deal of public attention. However, when considering these phenomena it is important to bear in mind the distinctive character of the SNB, based on its public mandate.

The SNB is required to pursue a monetary policy that serves the interests of the country as a whole. Unlike other companies, the level of its profits is no indicator for how successfully it has fulfilled its mandate. Its annual result is strongly influenced by changes in exchange rates, the capital markets and the price of gold, and can therefore fluctuate widely. During the past few years, the SNB has carried out extensive foreign currency purchases in order to combat upward pressure on the Swiss franc, and this has resulted in a very substantial increase in its foreign exchange reserves. Thus, even small exchange rate variations can lead to substantial fluctuations in earnings. That is why a prudent policy on provisions is essential, particularly in the current market environment, to ensure the SNB's long-term room for manoeuvre. The distribution of any net profit is clearly and conclusively specified in the National Bank Act (NBA). Even a high profit in the preceding year, as was the case in 2017, does not change this.

The SNB's legal form of a special-statute joint-stock company, which has remained unchanged since its foundation, means that the SNB share also displays special features. Compared to other joint-stock companies, the participatory and property rights of shareholders are restricted. For instance, voting rights of private shareholders are limited to a maximum of 100 shares. The property rights restrictions include the fact that total dividends may not exceed 6% of the share capital. The reason for this limitation is that SNB profits are generated through the fulfilment of its public mandate. Therefore, profits do not accrue primarily to the shareholders but to the public sector. The same applies for the assets, which the NBA specifies shareholders would have no right to, even in the event of a liquidation. According to the dispatch on the revision of the NBA of June 2002, this regulation helps to reduce the likelihood of a speculative overvaluation of SNB shares, as occasionally occurs on the basis of misunderstandings regarding the rights of SNB shareholders.

The special character of SNB shares means that they are less a conventional investment than a means for shareholders to express their solidarity with the institution. The legal form of a special-statute joint-stock company provides the SNB with an appropriate framework to fulfil its mandate as effectively as possible with the necessary independence.