October 6, 2016

Something Strange Is Going On In Switzerland: "Is Someone Trying To Buy The Swiss National Bank"

The surge has taken place at a time when the broader Swiss stock index remained virtually unchanged. "And nobody is talking about it" the Swiss publication adds stunned, which had prompted the bizarre question: "Is someone trying to buy the Swiss National Bank."

How is this possible?

The answer is that unlike other central banks which are owned by their respective governments (although in the case of the Fed that is not true), the ownership structure of the Swiss National Bank is unusual. It is owned by Swiss cantons (States), cantonal banks, private individuals and companies: it is a public company. The Swiss cantons together own 45%, 15% is owned by cantonal banks and the remaining 40% by private individuals or companies. The Swiss Federal Government owns no shares.

What's more, the shares of the SNB are listed on the Swiss stock exchange (Ticker: SNBN:SW) and their price moves up and down like every other share traded in the market. Every year, with rare exceptions like last year, shareholders receive a dividend, which according to the central bank amounts to CHF15 per year (and is not to exceed 6% of the share capital). 

So what is prompting the surge. As Tagesanzeiger writes it can not be a scramble for the dividend, whose yield has tumbled to the lowest ever, well below 1% as of today.

It is also unlikely that any of the bank's traditional shareholders are gobbling up its shares: It is unlikely that a canton or a cantonal bank would buy the shares en masse, because as the Swiss publications notes, "on the side of the shareholders - alongside the SNB's national owners - the situation has been carved in stone for years."

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