FIRST PERSON - Alex Magno - The Philippine Star

Another week, another major bank failure. Or so it seems.

Bankers and regulators worked feverishly over the weekend to solve the problem that is Credit Suisse. Their effective deadline was the opening of Asian markets Monday morning. If no convincing resolution on the Swiss bank’s fate was reached, the stock markets would certainly fall sharply – like dominos rolling from Asia to Europe to North America.

With no time to spare, Union Bank of Switzerland (UBS), the largest Swiss bank, agreed to acquire Credit Suisse at a deep discount. The discounted acquisition will hurt shareholders at Credit Suisse, but it will prevent a contagion that could spread across the world’s markets.

Or so the regulators hope. Last week, the Swiss National Bank infused $54 billion into Credit Suisse to arrest its rapid decline. It could not stop the collapse as the beleaguered bank’s stocks continued to fall and as depositors withdrew their cash at a rapid rate. Switzerland’s second largest bank was about to end its 167-year history.

UBS, Switzerland’s largest bank, agreed to buy Credit Suisse for $3.25 billion. Swiss authorities quickly amended the law that required such a deal to seek shareholder approval. By the time Asian markets opened, the deal was sealed. Shareholders of Credit Suisse will have to take a large haircut. There was no other option.

In addition to the acquisition, central banks across the globe agreed to establish dollar facilities to address any shortfall any bank might face. The ability of the central banks to act quickly and in close concert is admirable. But the next few days will tell us if all these will be sufficient to stabilize the global financial system.

The system remains under tremendous strain.

Although the institutional demise of Credit Suisse seemed quick, the crisis that severely weakened this bank has been progressing for months. The failure of Credit Suisse, categorized as a “globally systemic important bank,” deals a severe blow to the well-cultivated image of Swiss banking stability. If the bankers in Zurich could fail, anyone could as well.

Unlike the two regional US banks that collapsed just days earlier, Credit Suisse was obviously in the category of “too big to fail.” Yet fail it did.

At this delicate moment, no bank can be too small to fail. The markets are jittery. Governments understand that a banking failure will have a toxic fallout on the rest of the economy.

Moving forward, we could expect a further tightening of banking regulations. This will mean vastly less profitability for lending institutions and greater barriers to making money available to business – in addition to the prohibitive cost of money under the present regime of high policy rates.

Tight money translates into less investments and then into less job creation. That all spells economic slowdown.

The monetary authorities are trying to guide things towards a “soft landing:” an unavoidable recession that will be shallow and short. A worsening of the bank crisis assures a “hard landing.” The measures meant to combat that will, however, spell a more protracted bout with recession.


Russian President Vladimir Putin is now a wanted man. The International Criminal Court (ICC) issued a warrant for his arrest, specifically for the forced relocation of tens of thousands of Ukrainian children to Russia for re-education.

Putin is not the first head of state to be issued an ICC warrant of arrest while in power. Former Serbian president Slobodan Milosevic, responsible for wholesale atrocities during the Balkan wars of the 1990s, eventually ended up facing the court in 2001. He died of heart failure in jail.

Milosevic’s associates, former Serbian military commander Ratco Mladic and Radovan Karadzic, were likewise issued warrants of arrest. After years of hiding, they were eventually arrested. The court sentenced them for war crimes and both remain in jail.

The former president of Sudan, Omar al Bashir, was also issued a warrant of arrest. Over the past 13 years, he has been in hiding. Like the Serbian leaders, he will eventually be found and dragged to court to account for crimes against humanity.

The case of the deported Ukrainian children (Kiev counts 65,000 at least) is only the beginning. Putin will eventually have to face charges for the brutality Russia waged against the people of Ukraine: their senseless murders and rapes, the bombing of civilians and the summary executions of prisoners of war.

Moscow simply scoffed at the warrant issued against Putin. They choose to overlook the full significance of the ICC action.

The warrant draws a line between shared civility and utter savagery. It denies Putin and his ilk impunity. It condemns him in the eyes of the world – and ultimately in the esteem of his own people.

There is little likelihood in the near term that the ICC could send a team to Moscow to put Putin in cuffs and transport him to The Hague. But over the longer term, Putin will have to behave like a fugitive, avoiding the 120 or so nations who are under treaty obligations to arrest him on sight. He might avoid facing the court until his last breath. But the judgment of history cannot be evaded.

Putin is a small man, physically as well as emotionally and psychologically. Even as he might present himself as some sort of modern-day emperor through all the pomp and pageantry at the Kremlin, he is now a man imprisoned by adverse global opinion and universally condemned for all the brutality he committed.


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