A tremendous shift across financial markets is taking place. The London Interbank Offered Rate (LIBOR) is being replaced. Currently the benchmark for over US$350 trillion in financial contracts worldwide, the impact of the transition from LIBOR will be far-reaching for financial services firms, businesses and customers alike. Given the scope of the impact, planning for this transition must start now and begin with a comprehensive strategy.
Key impacted businesses and functions include capital markets, commercial lending, retail banking and wealth management, investment management, insurance, market infrastructure and corporate treasury.
The transition from LIBOR is primarily driven by the market and not regulators, and institutions and territories are preparing at different rates. PwC’s LIBOR and reference rate reform specialists in territories throughout the globe can help you assess, prepare for and execute on the transition. We work with you across the entire lifecycle of the transition, including:
PwC can help you create a LIBOR transition programme that works for where you are now. We can develop and implement a tailored governance structure that can help you manage your programme across your business units and the geographies where you operate.
PwC can help you analyse your company’s direct and indirect exposure to the LIBOR transition. We conduct assessments across your operations to help you understand where remediation might be needed with your products, functions and systems.
PwC can help you evaluate how your products may need to change once markets are no longer tethered to LIBOR. We assist you in evaluating the economic implications for your new offerings and the downstream effects of any changes you might make.
PwC can help you address vulnerable contracts, including fallback provisions, on your terms. We can work with you to identify LIBOR-linked contracts and extract the relevant data, analyse those contracts for risks and create a remediation plan to support your negotiations with customers and counterparties.
PwC can help you create an outreach plan for clients, counterparties, vendors and regulators. We can support you as you share how your company is adapting to the changes and monitor if the message is getting through.
PwC can help you identify and manage the updates you’ll need to process ARR trades across internal and external systems. We can help you update front- and back-office systems, treasury and ALM systems, vendor solutions and supporting business processes.
PwC can help you change your risk and valuation models to reflect the effects of the new ARR(s). We can work with you to construct curves, address changes to central clearing counterparty (CCP) discounting, incorporate historical data sets, adjust risk capital calculations and validate the updated models.
PwC can help you understand how the change will affect your accounting and tax programmes across the relevant standards. We can help you adapt to the post-LIBOR environment, reflecting hedge accounting rules and managing tax impacts on funds transfer pricing.
Partner, Financial Services Markets Leader, PwC Switzerland
Tel: +41 58 792 25 19