š¾ Double Fault Unforced errors, over the line and backhanders
In case anyone missed Novak Djokovicās visa saga, these are the key points:
4th January: Novak Djokovic, the worldās number one ranked tennis player, announced that he was about to travel to Australia from Spain (not from his native Serbia) as authorities had granted him a medical exemption to enter Australia in order to compete in The Australian Open.
Held in Melbourne, The Australian Open is the first of the four tennis āGrand Slamā events each year (along with The Championships at Wimbledon and the French and US Opens).
The Australian Open carries the highest prize money of the Grand Slam events, with over US$ 3 million available to the winner.
It was unclear what medical exemption Djokovic had obtained but as he had opposed vaccination as a criterion for travel in April 2020, it was widely presumed that Djokovicās exemption from vaccination was on the grounds of having recently been diagnosed with COVID. In 2020 Djokovic had generated significant controversy by speaking out against vaccination and then contracting COVID, leading to the cancellation of the tennis event that he had organised in the Balkans.
Australian entry rules typically require full and up to date vaccination as defined by the Therapeutic Goods Administration (āTGAā). Recognised vaccines comprise any acceptable combination of AstraZeneca (Vaxzevria or Covishield), Pfizer/Biontech, Moderna (Spikevax or Takeda), Sinovac, Bharat, Sinopharm, Sputnik and Johnson & Johnson.
Melbourne is the capital city of the state of Victoria, which has implemented one of the most severe lockdown regimes during the pandemic, which Djokovic had criticised when winning the previous yearās Australian Open, despite being one of a select group of leading players to be able to access a gym and outdoor courts at a separate hotel. Djokovicās comments were in turn criticised by Australian media and politicians.
5 January: Djokovic arrived in Australia but was detained overnight at the airport by Australiaās Border Force, who denied permission to enter the country, cancelled his visa, and notified him that they required him to leave. This led to a protest from Serbian President Aleksandar VuÄiÄ, complaints from Djokovicās parents about their sonās āimprisonmentā and protests in Belgrade. Australian politicians began to weigh in on the case, with Prime Minister Scott Morrison, leading the political points scoring by insisting that there would be ‘No special cases’
7 January: Once Australian authorities agreed to hear Djokovicās appeal against the decisions, they arranged for him to be placed in a government hotel for appellants with pending immigration cases.
9 January: It emerged that the authorities had granted Djokovicās medical exemption on the grounds of having been diagnosed with COVID just over a week before Christmas.
10 January: The hearing overturned the decision to cancel Djokovicās visa. Released from detention, he went to practise for the upcoming event, but immigration minister Alexander Hawke indicated that he was considering using his powers to determine whether Djokovic should be deported.
11 January: It emerged that Djokovic had incorrectly stated on his immigration declaration that he had not travelled in the 14 days prior to entering Australia even though he had travelled from Serbia to Spain. It also emerged that he had attended public events after testing positive for COVID.
12 January: Djokovic explained, via Instagram, that the incorrect declaration was an error by his agent, and he had now provided the correct information of his movements to the Australian Government. He apologised for participating in a public photoshoot with French magazine L’Equipe after heād received his positive PCR test result.
13 January: Djokovic was confirmed as the menās top seed in the draw for the Australian Open.
14 January: Immigration Minister Hawke announced that Australia had again cancelled Djokovicās visa on the basis that Djokovic could have stirred up anti-vaxxer sentiment, and posed a health risk. Djokovic appealed the decision and returned to the government hotel.
16 January: The Appeal Court upheld the judgeās decision and ordered Djokovic to be deported.
20 January: Sky News has reported that in June 2020, Djokovic acquired 80% of QuantBioRes, a Danish firm working on treatments for primarily unvaccinated victims infected with COVID.
The decision of the Australian court to uphold Djokovicās deportation last Sunday overshadowed news that we regard as more significant than the expulsion of a privileged athlete with a poor understanding of COVID protocols and a bad short-term memory.
Credit Suisse, the troubled global banking giant, announced the resignation of Sir AntĆ³nio Mota de Sousa Horta-OsĆ³rio from the role of chair which he had held since last April. His appointment reflected a primary focus on addressing the various scandals at Switzerlandās second largest bank and fixing its corporate culture. Horta-OsĆ³rio had committed multiple breaches of Covid-19 quarantine requirements in both the U.K. and Switzerland, including flying by private jet to attend last yearās Championships at Wimbledon, along with his wife and children, using centre court tickets originally intended for Credit Suisse clients.
The various scandals inherited at Credit Suisse included spying on employees and former employees, incurring a hit of US$5.5 billion on loans to Bill Hwangās failed Archegos business, and losses incurred by both the bank and its clients in the collapse of allegedly fraudulent finance company, Greensill. In April last year, Australian hedge fund manager, John Hempton told Bloombergās Odd Lots Podcast, that he expected it to take a long time to fix Credit Suisseās culture because āyou donāt usually find single cockroaches, thereās usually a colony.ā
Cockroaches are famously resilient, to the extent of being among the few expected survivors of nuclear war. In this case, Credit Suisse tasked Horta-OsĆ³rio with removing them but instead he has stood down.
Credit Suisse is a huge, once venerable institution, resulting from mergers and acquisitions, and dates back to 1856. Even though its share price has fallen by almost 90% over the last 15 years, it still has a market capitalisation of US$ 24 billion and made a profit of almost US$ 3 billion last year, at a net profit margin of 12.7%.
However, this pales in comparison with, for instance, JP Morgan, which generated profits of over $ 29 billion at a margin of 28.5%. Credit Suisse has lost money in two of the last five years, aggregating around US$ 10 bn in net profits during that boom time for megabanks, while JP Morgan has made closer to $US 150 billion, and not suffered any losing years. It would be easy to dismiss this as specific problems with one bank but as John Hempton pointed out, that would gloss over the fundamental problem here.
Publicly owned global financial institutions face competing challenges of satisfying formulaic regulatory demands, such as stress tests that comprise much box-ticking, whilst deploying volumes of global capital, which have expanded almost exponentially due to the policies of major governments in recent years and decades, into markets that are unable to generate sufficient organic need for that capital. Too much money chasing too few opportunities becomes a highly competitive game, and one in which itās incredibly difficult to break the momentum of a losing cycle.
The Global Financial Crisis weakened most major financial institutions. However, while US policy focused on enabling American banks to recapitalise in a way that helped them move on (at the expense of the broader economy), the fragmented structure of Europe has meant that that the spectre of 2007-9 continues to haunt the still weakened European banks, like Credit Suisse and many of their long-time neighbouring adversaries, whose choices were to strategically scale down and become niche players, to cede the turf to American and Chinese banks or to try to fight back, with inequal resources.
Although Archegos Capital Management was an American manager that mainly traded US stocks, American banks chose not to take extreme exposure as they were able to find richer pickings elsewhere. Japanese and European banks werenāt, as the table of losses from Archegos shows:
A new hierarchy of capital has emerged with Credit Suisse a long way down the pyramid. Sir AntĆ³nio Mota de Sousa Horta-OsĆ³rio was supposed to help them find their way back up again. Credit Suisse still has many capable people, excellent services, and an outstanding client book. But if theyāre to prevent haemorrhaging of talent and the closure of product offerings and to reverse the exodus of clients, theyāll have to do that without Horta-OsĆ³rio. If heās such a keen fan, he might fly to Melbourne to watch the Australian Open, but without its top seed of course.
Djokovic doesnāt seem to have learned from his previous COVID controversies; itās unclear whether heāll learn anything from this.
Reuters reports that Horta-OsĆ³rio tried to explain away actions by blaming staff for not warning him that he had broken British COVID laws (echoes of Boris Johnson blaming his staff for not warning him that the party he was at was in fact a party, not a work meeting).
Itās not clear what Credit Suisse has learned. Reuters reports that it has taken over 6 months for the issue to reach the surface because it has done so now not because of a brighter, cleaner culture but because of āan unforgiving backdrop of growing hostility among Credit Suisse’s senior executives, many of whom resented the chairman’s efforts to reformā. Horta-OsĆ³rioās breaches of Swiss quarantine law were revealed last month, for which his apology was reservedly accepted. The latest revelations may indicate that he continued to fall foul of reported “antipathy” from key members of the executive board, who were seeking to preserve the existing culture within the bank.
Credit Suisse is simply an obvious fracture point in a damaged system. We recommend listening to John Hemptonās warnings of the broader, hidden, systemic dangers that this portends.
Please Note:Ā While every effort has been made to ensure that the information contained herein is correct, MBMG Group cannot be held responsible for any errors that may occur. The views of the contributors may not necessarily reflect the house view of MBMG Group. Views and opinions expressed herein may change with market conditions and should not be used in isolation.
