UK Finance Guide to LIBOR Discontinuation for Banks and Lenders

On 12 February 2021, UK Finance published a guide to LIBOR discontinuation for banks and lenders (“Guide”).

The Guide provides a progress check on the LIBOR transition and identifies the actions required to meet the transition deadline at the end of 2021. The following main topics are discussed in each section: 

(a)

introduction to LIBOR discontinuation; 

(b) 

introduction to new reference rates and their differences from LIBOR; 

(c) 

examination of the role of working groups and regulators in the transition;

(d) 

discussion on hot topics – fallbacks, tough legacy contracts ,the LIBOR currency timeline and moving new business off LIBOR; and

(e) 

overview of the transition from a commercial and operational perspective. 

A useful checklist is also provided for potential next steps and transitioning smoothly away from LIBOR. Some key considerations include: 

1. 

setting up a LIBOR transition programme;

2. 

defining business strategy for transitioning legacy products and developing new risk-free rate products;

3. 

contract management, which includes identifying affected contracts and developing a remediation strategy;

4. 

developing a client outreach and communication strategy;

5. 

updating and re-validating pricing and risk management models;

6. 

ensuring system readiness;

7. 

performing impact assessments for treasury, finance and tax; and

8. 

a programme assurance to ensure that the transition project is set up and operating effectively. 

Please see the full Guide here: link