The writer is a former global head of equity capital markets at Bank of America and is now a managing director at Seda Experts Fifa president Gianni Infantino triggered a huge backlash last month when proposing the creation of a wholly owned subsidiary to run the moneymaking side of its football tournaments. The idea was that Fifa would sell a non-controlling 20 per cent stake for up to $4.2bn to an investor consortium led by Joshua Kushner’s Thrive Eternal, with JPMorgan Chase advising on the fundraising. It sparked a huge uproar, forcing Fifa to beat a hasty retreat.

Several regional confederations, including Uefa, expressed a loss of confidence in Infantino and threatened boycotts. Uefa has said it is even preparing a criminal complaint against Infantino. As the controversy rumbles on, it raises the perennial issue of reputational risk: When, if ever, should an investment bank turn down a client or transaction if there’s no legal or economic reason to decline it? Can a deal be legally sound but still too hot to handle in the public glare? Ever since the financial crisis, financial institutions have ratcheted up the focus on reputational risk.

Apart from a reminder of the cost of obvious wrongdoings, one lesson banks took from the financial crisis was that a transaction could be perfectly legal and impeccably documented and yet still expose them to bad publicity, political blowback, litigation and regulatory sanctions. As a result, most banks bolstered their reputational risk committees — regional and global — to screen controversial mandates. The premise is that a group of senior people with no involvement in the deal itself is better placed to give it a hard look and assess, dispassionately, whether the bank should lend its name to it.

The RRC gathers various bigwigs — the heads of banking and global markets, senior legal and compliance executives, corporate affairs honchos, and members of the global executive committee who report to the chief executive. In other words, the committee has a mix of senior front-office and control-function personnel. Contrary to what many might think, it is the opposite of a rubber stamp; it’s structurally inclined to say “no”.

There’s no upside for an RRC member to wave through a controversial transaction. If it subsequently blows up, nobody congratulates you for having a commercial mindset. Large banks are also allergic to negative headlines because damage control costs money and devours an inordinate amount of management time.

Getting a mandate through an RRC requires two things. First, the investment banking team needs to secure senior sponsorship. Someone at the top of the house must stand behind or “own” the transaction.

Second, the bankers need to work the room beforehand. A briefing memo alone will not persuade anyone. The managing director leading the deal must speak to key members in advance and count the votes before the meeting even begins.

Reputational risk differs from other kinds of risk that bankers are accustomed to evaluating. It’s not like credit risk; you can’t stress-test it the same way you can model, say, default probability. These cases are often one-of-a-kind.

Normally, the RRC weighs in when there are, for example, credible allegations of forced labour, environmental harm, money laundering, human rights violations, sanctions-busting or corruption. These committees are naturally better at identifying these standard red-flag risks than at something such as predicting broader public reaction to a proposal to monetise World Cup commercial rights. There’s also a powerful institutional factor at play.

Like the butler Stevens in The Remains of the Day, many bankers would prefer simply to serve their client without casting judgment. “It’s not our place to decide the optimal way for football to operate in Europe and the UK,” said JPMorgan’s then head of banking when it was criticised for backing the abortive European Super League project back in 2021.