LIBOR Transition to Alternative Risk-Free Rates

Overview

The London Interbank Offered Rate (LIBOR)*, one of the main interest reference rates used in financial markets across the globe, will cease to exist or will be non-representative starting on January 1st 2022. In particular, the Financial Conduct Authority in the United Kingdom (FCA) announced on March 5, 2021 that LIBOR panel Bank Submissions will cease immediately after December 31, 2021 for all GBP, EUR, CHF, JPY settings as well as for the 1-week and 2-month USD settings. The FCA also announced that the remaining LIBOR settings for USD will cease on  June 30, 2023.

LIBOR’s weaknesses have led regulators to decide a transition away from LIBOR to alternative reference rates known as Risk-Free-Rates (RFRs). National Working Groups were established to create new rates, based on recommendations of the Financial Stability Board, an international body monitoring the global financial system.

Financial Institutions across the globe are now in the process of revising their infrastructure, preparing a switch by the end of 2021. The changes will affect LIBOR and EONIA (Euro Overnight Index Average). EURIBOR (Euro Interbank Offered Rate) was fundamentally reformed in compliance  with Regulation (EU) 2016/1011 of the European Parliament and of the Council of June 8, 2016 on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds (“Benchmark Regulation” or “BMR”, see below in FAQ). EURIBOR  is expected to remain in use until any announcements by its administrator are available.

Alpha Bank is taking all the necessary steps to ensure compliance with the regulatory changes currently under way. Furthermore, it is involved in the industry transition with the regulators, central banks and industry fora, aiming to ensure a successful transition for its Customers. Alpha Bank supports the transition to RFRs and intends to help its Customers to reach the post LIBOR era.

*LIBOR in the five LIBOR currencies, USD, GBP, EUR, JPY and CHF. For USD LIBOR only 1w & 2m settings will cease to exist after December 31st 2021 but all new financial products post that date should not be generated to the remaining LIBOR tenors.

Links to Working Groups

The table below provides links to helpful information and guidance from the National Working Groups.

The announcement of the UK Financial Conduct Authority (FCA) (March 5, 2021) on the future cessation and loss of representativeness of the LIBOR benchmarks can be found in the following link: FCA announcement.

Other Useful Links

• Commission Implementing Regulation (EU) 2021/1847 of 14 October 2021 on the designation of a statutory replacement for certain settings of CHF LIBOR
  
• Commission Implementing Regulation (EU) 2021/1848 of 21 October 2021 on the designation of a replacement for the benchmark Euro overnight index average

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