(3 minutes read)
· Seychelles will be soon switching over from LIBOR to adopt a new system for its banking operations. LIBOR (The London Inter-Bank Offered Rate)is one of the main interest rate benchmarks used globally in financial markets
· The benchmark is regulated by the United Kingdom’s Financial Conduct Authority (FCA)
· The Intercontinental Exchange Benchmark Administration is the body administering its operations. Seychelles has around 185 clients with foreign exchange loans set against LIBOR
Seychelles will be soon switching over from LIBOR to adopt a new system for its banking operations. LIBOR (The London Inter-Bank Offered Rate)is one of the main interest rate benchmarks used globally in financial markets. The benchmark is regulated by the United Kingdom’s Financial Conduct Authority (FCA). The Intercontinental Exchange Benchmark Administration is the body administering its operations. Seychelles has around 185 clients with foreign exchange loans set against LIBOR.
The ABSA Bank Seychelles, Mauritius Commercial Bank (MCB) and Nouvobanq are some of them. They have good exposures based on LIBOR benchmarks. These banks are obliged to inform their clients of necessary adjustments in contracts. The banks have already started contacting their clients for explaining how they will be affected. They have also to develop plans to address the impact during the transition sp that a borrower will not end up paying more for the same amount of money they have loaned from banking sources.
The transition from LIBOR is affecting banking sectors in many countries. New rates will be applicable. , The banks will have the option to choose from alternative benchmark reference rates.
LIBOR is derived from the rates at which a group of panel banks indicate they are willing to lend to each other. Benchmark interest rates are a core component of financial markets. LIBOR is the most widely used benchmark for short term interest rates. It is published daily in five different currencies – United States Dollar, Euro, Pound Sterling, Swiss Francs and Japanese Yen. Financial institutions use the published rates as a benchmark for various financial products and contracts, such as loans, bonds, and others.
