Search
 
Best Practices

Libor’s 2021 Demise Means More Work for Treasury

The move to a new benchmark rate will require treasury teams to deal with older contracts that still cite Libor.

By Susan Kelly | Updated on September 19, 2017

The fate of Libor, the rate that underpins $350 trillion worth of financial contracts, has been hanging in the wind for years. Now its future is clear: The U.K.’s Financial Conduct Authority (FCA) says Libor will cease to exist by the end of 2021. And that means a lot of work for corporate treasurers, who are responsible for all those loan agreements, derivatives contracts, and other documents that refer to Libor.

The reputation of Libor, the rate at which major banks lend to one another, was tarnished by a 2012 scandal that revealed banks had manipulated the rate. But regulators’ move to pull the plug has more to do with the fact that in the wake of the financial crisis, interbank lending tailed off, making the bank quotes on which Libor is based largely hypothetical. In fact, in his speech announcing that Libor would cease, FCA chief executive Andrew Bailey said that for one of Libor’s 35 currency and maturity iterations, the dozen banks that submit quotes had, in all of 2016, done just 15 transactions big enough to be relevant.

Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.

Your access to unlimited Treasury & Risk content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Critical Treasury & Risk information including in-depth analysis of treasury and finance best practices, case studies with corporate innovators, informative newsletters, educational webcasts and videos, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM websites including PropertyCasualty360.com and Law.com.

Already have an account?

NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

Recommended Stories

Treasury & Risk

Join Treasury & Risk

Don’t miss crucial treasury and finance news along with in-depth analysis and insights you need to make informed treasury decisions. Join Treasury & Risk now!

  • Free unlimited access to Treasury & Risk including case studies with corporate innovators, informative newsletters, educational webcasts, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM publications including PropertyCasualty360.com and Law.com.

Already have an account? Sign In Now
Join Treasury & Risk

Copyright © 2024 ALM Global, LLC. All Rights Reserved.