Towards the end of 2018, the PRA and FCA wrote to the CEOs of the main UK banks and insurers to ask about their preparations for transitioning from LIBOR to risk-free rates. Last week, they fed back on their findings. Exposures to LIBOR are likely to run right across a firm's business. A big weakness the regulators found is that some firms don’t have the management information to know exactly what, where and how much. That certainly isn’t a comfortable place to be.
Understanding your LIBOR exposures – including your contract documentation - is critical to ensuring an efficient and cost-effective transition. A&M has the deep benchmark, data and technology expertise to help you get a grip on the vast array of relevant information spread across your organisation.
exposure to LIBOR is to be found not only deeply embedded across firms’ assets and liability structures, but also in a wide range of applications and infrastructure used for valuation, pricing, performance evaluation and risk management. Exposure to benchmarks can also be found in more idiosyncratic parts of firms’ operations (e.g. ancillary contract terms). It is therefore prudent for firms to undertake a thorough stocktake to identify where and how LIBOR is relevant to their business and whether any relevant exposure to other interbank offered rates (IBORs) should be considered.