Offside trap

Banks could get stuck in FIFA penalty area

Global banks will be antsy about getting stuck in the FIFA penalty area. Two dozen lenders are mentioned in the 164-page US Department of Justice (DoJ) rap sheet naming multiple employees of the soccer body. The risk for bank investors is that any sniff of wrongdoing could change how US regulators view past misdemeanours.

None of the senior officials at FIFA have yet been found guilty of anything. Even if they are, lenders - including HSBC, Citigroup and JPMorgan - aren't necessarily at fault for processing a host of transactions cited in the charge sheet. It is even possible they flagged suspiciously large or unusual payments to the relevant regulator at the time.

But past settlements raise the stakes. That's because many of the banks named in the charge sheet have signed non-prosecution or deferred prosecution agreements, which leave the authorities leeway to revisit cases if other wrongdoings are later unearthed. Lenders will be uncomfortably aware that the bar for being hit by regulators is at an all-time low.

The recent experience of UBS will cause furrowed brows. The Swiss bank struck a non-prosecution deal with US regulators over rigging Libor. Yet the DoJ tore that up over UBS's involvement in the recent foreign exchange market scandal - even though the lender was the first to come clean.

Regulators have proved quick to punish their charges in recent years, mostly with good reason. But with profitability still anaemic, the last thing banks need is another yellow card.