Overview
LIBOR has been a global reference point for financial products since the mid-1980s and is one of the most widely quoted interest rate benchmarks at present. LIBOR is currently undergoing international and national reforms. The UK Financial Conduct Authority (‘FCA’), which regulates LIBOR, stated on 5 March 2021 that all LIBOR settings for all currencies will either cease or no longer be representative immediately after the following dates: • 31 December 2021, for Sterling, Euro, Swiss Franc and Japanese Yen LIBOR settings in all tenors, and US Dollar LIBOR 1-week and 2-month settings; and • 30 June 2023, for US Dollar Overnight, 1-month, 3-month, 6-month and 12-month settings. The US Federal Reserve and other regulators have also taken measures to move markets away from LIBOR within set timelines. As a result, the continuation of LIBOR on their current basis cannot be guaranteed beyond the dates mentioned above.LIBOR transition is currently an ongoing process. Although Mashreq is constantly monitoring the market developments associated with the transition away from LIBOR, information relating to LIBOR discontinuation may change at any time.
Mashreq’s Approach to LIBOR Transition:
Mashreq is responsibly implementing an enterprise-wide LIBOR transition approach to assess and mitigate potential impacts associated with LIBOR Transition across all aspects. The Bank is determined to treat customers fairly by following the FCA recommendations to “adopt a replacement rate that aligns with the established market consensus, reached through appropriate consultation, and recognized by relevant national working groups as an appropriate solution2.”
1Collectively refers to LIBORs published for 5 currencies (GBP, USD, CHF, EUR and JPY) in 7 tenors (from overnight to 12 months) 2Conduct risk : www.fca.org.uk/markets/libor/conduct-risk-during-libor-transition
Updating product pricing based on the new reference rates
Changing systems and operational procedures to onboard new products
Revising legal contracts
Working to increase awareness of the new rates
Disclaimer: This communication does not deal with every important topic relating to LIBOR transition. It is not designed to provide legal, financial or other advice. By reviewing this communication, you agree that Mashreq and each of its affiliates (collectively 'Mashreq Group') is not acting as your advisor and is not providing advice or making any recommendation regarding LIBOR transition; it being understood that any information or explanations pertaining to LIBOR transition provided via this communication shall not be considered advice or a recommendation. Each recipient of this communication will make its own independent decisions regarding LIBOR transition, based upon its own judgement and upon advice from such advisors as it has deemed necessary. Mashreq does not accept any responsibility for, and shall not have any liability with respect to, the administration, submission or any other matter related to benchmark rates such as LIBORs or any alternative rate including, without limitation, whether the composition or characteristics of any alternative rate will be similar to, or produce the same value or economic equivalence as, the original benchmark rates (including IBORs) or whether any alternative rate will have the same volume or liquidity as the original benchmark rate prior to its discontinuance or unavailability.
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