Interbank Offered Rates (IBORs) are interest rate benchmarks that are used by financial institutions. They determine the market conditions under which financial institutions lend money to one another. Today’s most common benchmarks are the London Interbank Offered Rate (LIBOR), the European Interbank Offered Rate (EURIBOR) and the Euro Overnight Index Average (EONIA). IBORs feature in a wide variety of financial products such as mortgages, business loans, government bonds, credit cards but also interest rate derivatives. Since the LIBOR scandal in 2012, supervisory authorities have taken measures to restore confidence in IBORs. Owing to a drop in interbank lending and the declining number of panel banks , some benchmarks may no longer be representative of the market underlying the benchmark. 

Changing legislation and impact on organisations

As of 1 January 2022, the current IBORs will no longer comply with the EU Benchmarks Regulation (BMR). As a result, they need to be replaced by alternate reference rates. The IBOR transition will have a major impact on financial services providers that use IBORs. The change of reference rate will not only affect existing contracts, but also internal departments such as Legal, Compliance, IT & Infrastructure, Accounting & Tax as well as the front office. To assess this impact, organisations  need to map out which contracts, systems and processes feature IBORs and which steps must be taken to bring the IBOR transition to a successful conclusion. 

What BDO can do for you

BDO is here for you. We offer a team of specialists who use technological solutions to help you through IBOR transition. They can provide the following services:

• Impact assessment: identifying systems and processes that feature IBORs.
• Strategy & Operations : defining and implementing a roadmap in which the different stages of the IBOR transition are fleshed out and different scenarios are described.
• Contract analytics: using data analysis and algorithms to cluster structured and unstructured contract and other data, and to pinpoint contracts in scope for adjustments. 
• Monitoring: implementing contract monitoring, including contract review and clear status reports on the IBOR transition.

More information

To find out more about how BDO can help you through the IBOR transition, please feel free to contact one of our specialists with no strings attached.