Interbank Offered Rate (IBOR) is a key benchmark interest rate at which major global banks lend to one another for loans. It is one of the benchmark rates used by financial products such as loan contracts with floating rates and derivative transactions such as Cross Currency Swap and Interest Rate Swap.
London Interbank Offered Rate (LIBOR) is one of the most commonly used types of IBOR in the global banking industry as the basis for calculating various interest rates for financial products as mentioned above.
The transition away from LIBOR arises from global reforms to improve the resilience and integrity of financial benchmarks. As part of this change, the Financial Conduct Authority (FCA) as the authority that oversees LIBOR movements stated that the phase-out of LIBOR is scheduled in stages. For further information about why the banking industry is changing globally and its development, please click here.
|Stages of LIBOR Phase-Out
|31 December 2021
|30 June 2023
Currency & related Tenor
- USD for 1-week and 2-month tenor
- USD for overnight, 1-month, 3-month, 6-month, 1-year (all tenors)
ALTERNATIVE REFERENCE RATES/ ARR
In place of LIBOR, Overnight Risk-Free Rate (RFRs) or alternative reference rates is to be used based on the currency, among others as follows:
|Alternative Reference Rates
|Alternative Interest Rates
Secured Overnight Financing Rate (SOFR)
Tokyo Overnight Average Rate (TONA)
Sterling Overnight Index Average (SONIA)
Euro Short-Term Rate (€STR)
Swiss Average Rate Overnight (SARON)
The transition of IBOR rates will affect the calculation of the floating rate at PT Bank Central Asia Tbk, such as short-term loans, long-term loans, Trade Finance, and derivatives (Cross Currency Swap, Interest Rate Swap).
In response to the replacement of the IBOR benchmark for derivative transactions, PT BCA Tbk has adhered to the provisions of the ISDA 2020 IBOR FallBacks Protocol as of 21 July 2021.
AM I AFFECTED BY THIS CHANGE?
Yes, if you have:
- Products and/or services at PT BCA Tbk. which refer to LIBOR in USD with a tenor of 1 (one) week and 2 (two) months, or Pound Sterling (GBP)/Euro (EUR)/Swiss Franc (CHF)/Yen Jepang (JPY) for all tenors in which the fixing date is due on 31 December 2021.
- Products and/or services at PT BCA Tbk. refer to LIBOR in USD in which the fixing date is due on 30 June 2023.
WHAT SHOULD I DO?
- If you have a product and/or service at PT BCA Tbk. which refers to LIBOR as stated above, then you are affected by the LIBOR discontinuity. If you need more information on this matter, please contact our Account Officer.
- PT Bank Central Asia Tbk will start contacting and informing customers about changes in IBOR and providing information on its development from time to time on a bilateral basis if necessary.
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