The world's governing soccer body is reportedly lending its excess liquidity, in a bid to avoid Swiss surcharges on cash deposits.
FIFA is granting short-term loans to Swiss towns and municipalities, «Zuerichsee-Zeitung» (behind paywall, in German) reported. The Zurich-based association, which reported liquidity of 1.4 billion Swiss francs ($1.53 billion) on its books at the end of 2020, is lending sums between 5 million and 10 million francs, the Swiss outlet reported.
This adds another player to the lending game in Switzerland, where negative interest rates have sent pension funds and insurers scrambling to lower their cash piles in a bid avoid hefty charges. FIFA's plan pays off for towns borrowing because they pay less money back at loan maturity. For FIFA, the plan works if the dollar loses value compared to the Swiss currency during the duration of the loan.
Participative Towns, Cities
Specifically, FIFA has lent to communities and cities including Winterthur as well as Zurich lakeshore towns Meilen, Zumikon, and Waedenswil. The municipalities are using the funds to ensure their short-term liquidity, the local outlet reported.
Asked whether it is opportune to borrow from an institution with a history of corruption like FIFA, an official of Meilen told the Zuerichsee-Zeitung that it isn't for the town to form an opinion.
Swiss Sports Associations
The irony is that FIFA, besides not possessing a banking license, has wrought huge damage to several Swiss banks including Credit Suisse, which was in 2018 rapped by its regulator for laundering ill-gotten money from the soccer body.
FIFA is organized as an association, which a legal form it shares in Switzerland with other sports organizations like the International Olympic Committee and the World Anti-Doping Agency, or WADA.
New Lending Standard
As long as FIFA's statutes don't expressly forbid the lending, the soccer body is free to do so, finance expert Sandro Fuchs (pictured) told the outlet. «Private individuals may also grant loans,» said Fuchs, who runs the Center for Public Financial Management at the Zurich University of Applied Science, or ZHAW.
(Image: ISAR)
Borrowers are increasingly eschewing banks for these transactions in favor of online platforms. This route is becoming a new standard. «Towns no longer have a house bank, but are tapping neutral platforms for liquidity, of course under competitive circumstances,» said Fuchs.
