The end of 2021 is fast approaching and regulators in the UK and the US remain steadfast in their encouragement for banks to stop using LIBOR where possible before that date.
In light of this, UK Finance and PwC have published Discontinuation of LIBOR – Guide for Banks and Lenders, a resource specifically focused on the transition issues faced by banks and other lenders. It is intended as a useful toolkit to support their engagement for the move away from LIBOR and to guide them to the relevant information to support preparations. The guide is especially useful for those that are less familiar with the latest detail on LIBOR discontinuation.
The guide contains an up to date summary of the latest regulatory, commercial and operational issues relating to LIBOR transition. It also includes a checklist of practical next steps that banks and other lenders (for example, credit funds) might consider in light of the fact that the end of 2021 is fast approaching. It covers key hot topics, such as the latest trends in fallback rates, credit spread adjustments, the possible use of the UK Benchmark Regulation to help with ‘tough’ legacy contracts, and how and when to move new business off LIBOR.
Although published by UK Finance (the industry body for banks and financial institutions in the UK), the Guide refers to the positions of various working groups and regulators across the globe and the most frequently used currencies.
Although we did not work on this guide, we have spoken at UK Finance meetings on IBOR transition and would be delighted to discuss this important topic with anyone that has questions on the guide or otherwise in relation to IBOR transition.
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