Financial News
Written by: Zhang Weilun
2019-11-20 22:30
Last updated date: 2019-11-20 22:30The Financial Conduct Authority (FCA) has announced that it will no longer mandate or persuade member banks to continue offering LIBOR quotes after 2021. It is expected that market participants will not be able to continue using LIBOR after 2021.
The accounting firm KPMG conducted surveys of more than 20 large banks in Hong Kong, Indonesia and Singapore. The results show that Hong Kong banks are at a more mature stage in transitioning to LIBOR than other Asian banks.
The report pointed out that 6 of the 10 Hong Kong banks surveyed have begun to develop LIBOR transition plans and plans; it also pointed out that five of the banks surveyed have begun to issue new risk-free interest rates as benchmark interest rate products. However, the report also pointed out that four of the banks are US-funded or European-funded banks, reflecting the regulatory authorities in the two places, which are more active in promoting the preparation of the LIBOR transition by the banking industry participants and leading the industry to discuss the new risk-free interest rate.
Only one Hong Kong bank completed the transition plan
The report also quoted the Hong Kong Bank interviewed as saying that the transition from LIBOR to the alternative benchmark interest rate is complex, involves a wide range of issues, and requires a lot of preparation to make a smooth transition. However, only one bank has completed the transition plan so far, while other banks are still in the process of developing, and have not even begun to develop plans. Only 3 of the 10 banks surveyed indicated that they have completed the quantitative LIBOR risk exposure, and the other two have not yet started the analysis.
In addition, six of the 10 banks surveyed indicated that the challenge from legal and litigation risks was the biggest concern when transitioning to the new alternative benchmark interest rate.
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