Word on the web: Have UK banks scored an own goal?

With UK banks launching internal investigations into whether they handled suspect transactions by officials of FIFA, football’s world governing body, who, if anyone, should be concerned?

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Following news of the resignation of Sepp Blatter as its President, the Fédération Internationale de Football Association (FIFA) corruption story shows no signs of leaving the front pages. If anything, media interest has intensified. 

The UK financial services sector has now become embroiled in the scandal, with HSBC, Barclays and Standard Chartered all reported to have launched internal reviews to determine whether they cleared corrupt payments. But how significant are these investigations?   

Cause to be nervous These three UK banks may not have been accused of anything, but BBC Business Correspondent Joe Lynam believes all three have reason to be concerned – particularly in light of recent banking fines.  

“HSBC and Standard Chartered will be especially nervous,” writes Lynam. “They've already paid fines in the past three years of almost £1.3bn ($2bn) and £650m ($1bn) respectively to US regulators for permitting money laundering or for flouting US sanctions.”

Barclays will also be keen to prove its innocence, he notes, following the list of fines the bank has paid out to domestic and international watchdogs in recent months.

BBC analysis
"The perhaps shocking truth is that the investment world really doesn’t seem to care" Investor ambivalence But Alan Oscroft of multimedia financial services company The Motley Fool suggests that while the banks might be anxious, it’s unlikely the probes will taint their shares. 

“There’s no suggestion that the banks, three out of a total of 14 named, have knowingly connived in any corrupt payments,” Oscroft points out. “But even when banks actually are guilty of venal misbehaviour, the perhaps shocking truth is that the investment world really doesn’t seem to care.”

He cites Barclays’ shares, which were “pretty much unmoved” by the bank’s fine for rigging LIBOR, as evidence to support this argument. “From last summer’s low point the price is now up nearly 30% to today’s 270p — and that takes into account the complete lack of movement resulting from the weekend’s FIFA news,” he adds.

The Motley Fool opinion

Hot potatoes spark change Like Lynam and Oscroft, The Independent’s James Moore stresses that, so far, the US Federal Bureau of Investigation (FBI) has not actually alleged any wrongdoing on the banks’ part. In fact, he argues, the banks may even be in a position to effect change within FIFA. 

“There has been much commentary on the role that FIFA’s sponsors might or might not play in forcing change at football’s global governing body; the multi-billion dollar corporations that have paid huge sums to associate their brands with the World Cup,” writes Moore. “But the banks could ultimately play a far more important role.”

Moore suggests that with British banks wary of incurring future fines, they may choose to avoid handling “hot potato” FIFA accounts altogether.

“At the very least, it’s probably fair to assume that any sizeable transaction involving FIFA or one of its officials will trigger a warning light, at least while the FBI’s investigation is ongoing, which could make things inconvenient for the organisation, to say the least,” he writes. 

The Independent comment

Seen a blog, news story or discussion online that you think might interest CISI members? Email joanna.lewin@wardour.co.uk 
Published: 05 Jun 2015
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