At RMB we believe that an internationally recognised and sustainable benchmark solution is vital for an efficient financial market. We therefore support the market transition from LIBOR and other IBORs and are actively involved in industry discussions.
We are contributing to the industry dialogue with regulators, central banks and industry bodies, aiming to achieve continuity for benchmark-based products, continued financial market resilience and good outcomes for our clients.
The transition from LIBOR and some other IBORs is expected to impact existing and future transactions across contract types and client segments. Adopting new ARRs will impact a range of transactions and products and clients could expect to be affected if they have a floating rate loan or credit facility, deposit or derivative that has or may have payments linked to LIBOR or other affected legacy benchmarks that mature after 2021. This may include corporate loans and derivatives trading. The ARRs differ economically to LIBOR and differ by currency too – this will be taken into account as we work towards enhancing our product offering.
We are assessing how the transition may impact LIBOR-linked transactions and products, while we are preparing to review and enhance our product offering. We are closely monitoring market developments during this process and benchmarking against our global peers during our journey towards reference rate reform.
The LIBOR transition is a continuing journey that is evolving as the market works towards a consensus on how to treat existing products. We are in the process of:
- Reviewing our internal systems and making the necessary changes to accommodate ARRs
- Continuing to stay close to the market updates on this topic to ensure we evolve as required
- Introducing new product offerings
- Reaching out to clients on the reform plans for existing products
Product changes
It is important to note that with the phasing out of LIBOR, some products may not be available with an alternative benchmark and could be discontinued or phased out. For some products we do not yet know the exact changes that will be required, but we are working towards product offerings that are relevant for our clients’ current needs and taking these changes into account. Our LIBOR programme team has:
- Quantified the exposure to LIBOR, reference rate, product class and tenor to inform our transition strategy (classification of relevance, prioritisation and client impact)
- Developing strategies for the management of market data, rates and curves supplied to both calculation engines and front-end systems
- Assessing the potential risk as a result of the changes in terms of tax, legal, operational, accounting, liquidity and accounting
What clients can do in the mean time
We encourage our clients to undertake a similar analysis and review exercise and to take appropriate independent professional advice (legal, tax, accounting, financial or other) so that they can understand the impact of the discontinuation of any LIBOR on their portfolios with RMB and their business more generally.
Please see links to more Information on the LIBOR cessation.
More information about LIBOR
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More about LIBOR
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