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Transitioning away from LIBOR

Transitioning away from LIBOR

The shift away from (L)IBOR is one of the most significant developments on the financial markets. Have you evaluated the impact on your business?

Have you assessed the impact of the shift away from (L)IBOR on your business?

The scandal in 2011 put the future of LIBOR in the spotlight. Further doubts were raised as the volume of unsecured interbank funding markets continued to decline rapidly in the aftermath of the financial crisis, with far fewer transactions underpinning (L)IBOR submissions. The Financial Stability Board estimates that more than USD 370 trillion worth of notional contracts used IBOR as a reference rate. With benchmarks being embedded in an extensive range of credit products and derivatives, the shift away from (L)IBOR is one of the most profound developments in financial markets.

Swiss businesses must plan already now how they will adapt to the transition, as the challenges will prove to be significant. Some will need to be tackled by the industry as a whole – such as the creation of liquidity and a term structure for the new reference rates or fallback approaches for (ISDA) derivative contracts. Others will need to be resolved by individual organizations – in many cases with far-reaching implications across the entire value chain.
 

Have you assessed the impacts on your business?

  • Which business areas, processes and products are affected?
  • What are the impacts on your Treasury function? How will your Asset & Liability Management (ALM) need to be adapted?
  • How do your valuation and risk methodologies need to change?
  • What are the possible fallbacks for contract arrangements to minimize legal risks? 
  • What impact does the reform have on (hedge) accounting treatments?
     

Raising awareness among key stakeholders across your organization is the first step, followed by performing an initial impact assessment as critical enablers for the establishment of a comprehensive transition plan.

Gain insights on how your company can prepare for the transition from LIBOR to new risk-free reference rates. Register below for an awareness workshop set up specifically for your institution and an impact assessment to find out more about our approach to managing this transition.
 

Key contacts

Matthias Degen, Partner, Financial Services

Martin Thomas, Director, Head of Finance- and Treasury Management
 

Further information

SNB working group

ECB working group

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