Interbank Offered Rates (IBORs) are being replaced by Risk Free Rates (RFRs). This site provides guidance on different aspects of IBOR transition - what is happening and why, required actions and time lines.
Please refer to the information below, as well as the sections dedicated to Institutional, Corporate and Private clients.
Overview of IBOR transition
|Quick guide||In more depth|
Since the 1980s, interest rate benchmarks, known as Interbank Offered Rates (IBORs) have been part of daily life for financial markets world-wide.
These benchmarks are embedded in the pricing of many financial products including loans, mortgages, bonds, derivatives, ETFs, and structured investment products.
The interbank unsecured lending market that IBORs (e.g. LIBOR and EONIA) seek to represent has shrunk substantially, leading to concerns that they pose a systemic risk. As a result, IBORs are being replaced by alternative Risk Free Rates (RFRs). This was recommended in 2014 by the Financial Stability Board, the international industry body.
RFRs provide robust and credible overnight reference rates, well suited for many purposes and market needs. Both cash and derivatives markets will transition to utilise RFRs as primary benchmarks.
The UK’s FCA confirmed on 5 March 2021 the dates that panel bank submissions for all LIBOR settings will cease, after which representative LIBOR rates will no longer be available:
- immediately after 31 December 2021, in the case of all sterling, euro, Swiss franc and Japanese yen settings, and the 1-week and 2-month US dollar settings; and
- immediately after 30 June 2023, in the case of the remaining US dollar settings.
The EONIA (Euro Overnight Index Average) benchmark will cease on 3 January 2022. Other benchmark reforms are happening in countries around the world.
These changes will require the contracts of some products to be changed so that they reference the alternative Risk Free Rates. Regulators have stressed that this is a complex and time-consuming process and have encouraged all users of impacted financial products to take action ahead of the cessation date.
Deutsche Bank is actively involved in industry efforts supporting transition to IBOR alternatives. The bank has taken extensive steps to prepare for the discontinuation of IBORs and is working with clients to ensure awareness and support transition activities.
Clients are encouraged to reach out to their Deutsche Bank representative to discuss how IBOR transition will impact them. Alternatively, please email our dedicated team at IBORtransition@db.com.
More information on the implications of IBOR transition for retail, institutional and corporate clients can be found on the individual client type pages on this site.