Author: Lawyer Enrico Germano

A recent investigation by the Swiss radio and television station RTS revealed that major Swiss cities, including Geneva, Lausanne and even Berne, as well as the canton of Neuchâtel, have in recent years been able to benefit from substantial loans from FIFA (Fédération Internationale de Football Association in French), the international football federation based in Zurich. The amounts are significant, with Geneva borrowing CHF (Swiss francs) 150 million in 2022, the Canton of Neuchâtel CHF 100 million and Lausanne CHF 40 million. 

In mid-January 2023, a press investigation by the Tamedia Group revealed that the city of Berne – which is a Swiss public body as well as the capital of Switzerland – had received several short-term loans from FIFA totalling CHF 1.8 billion over the past six years. 

It should be noted that FIFA defines itself as an association of associations with no commercial or profit motive, but at the same time generates billions of Swiss francs in revenue through television rights, licences, sponsoring and other forms of marketing. By statute, FIFA is governed by the provisions of Articles 60 et seq. of the Swiss Civil Code on non-profit associations. In fact, FIFA has a lot of liquidity at its disposal, and it is much cheaper to circulate these large sums of money than to deposit them in banks with their negative interest rates.. 

Recently these financially very attractive loans, which are perhaps granted without fees and interest, have also started to raise questions and perplexities in certain political circles. FIFA has therefore acted for years, in a completely legal manner, almost as a lending bank for many Swiss cities and public bodies, which have benefited and saved from it. In the meantime, many cities are ready to reconsider such a policy of short-term loans, in particular the city of Geneva, which has taken out loans from FIFA since 2018 using the Zurich-based Loanboox platform, which connects investors and borrowers. On Wednesday evening, 1 February 2023, the news in French-speaking Switzerland announced that not only FIFA had granted such loans to Swiss public bodies, but the list also included health insurance companies, insurance companies, pension funds and even private companies as investors.

Under Swiss law, Art. 312 of the Code of Obligations states that a fixed-term loan is a contract whereby the lender undertakes to transfer the ownership of a sum of money or of other fungible goods to the borrower, who in return undertakes to return objects of the same quantity and quality to him. It follows that such activities, unlike banks for example, are not subject to authorisation by FINMA, the independent federal supervisory authority with sovereign powers over the Swiss financial market, based in Berne. For such lending transactions, there is no regulatory or supervisory obligation on the part of FINMA, even though the sums involved are often in the millions. Please note that pursuant to Art. 3 of the FINMASA (Federal Act on the Swiss Financial Market Supervisory Authority) are subject to financial market supervision:

a. persons and entities that under the financial market acts require to be licensed recognised, or registered by the Financial Market Supervisory Authority; and

b. collective capital investments.

In light of the recent journalistic investigations, some Swiss politicians do not rule out filing a parliamentary interpellation shortly to ask why such predominantly short-term lending transactions are not subject to authorisation and/or supervision by FINMA, in the interests of transparency and equal treatment.