Harrisburg, PA - Secretary of Banking and Securities Robin L. Wiessmann has issued a letter urging state-regulated banks, credit unions, and financial services companies to take action and prepare for the replacement of London Interbank Offered Rate (LIBOR). LIBOR is the estimated average of interbank lending rate in London. The Financial Conduct Authority, which oversees the benchmark, announced it will be phased out by the end of 2021. “Financial firms that use LIBOR as a reference or index rate for loan or other contracts need to begin taking risk management actions now,” said Wiessmann. She continued, “If firms delay the transition to an alternative index, the risks associated with the discontinuance of the interest rate index will only be exacerbated.” The Department suggests the following risk management actions: In June 2017, the Alternative Reference Rates Committee (ARRC) identified as an alternative to LIBOR the Secured Overnight Financing Rate (SOFR), which is published by the Federal Reserve Bank of New York in cooperation with the U.S. Office of Financial Research. While most transactions may be best suited for SOFR, financial institutions may select any reference rate for use as an alternative to LIBOR. The letter was directed to all Pennsylvania state-chartered institutions, and licensed and registered financial services companies. MEDIA CONTACT: Dulcey Antonucci - 717.214.6036, DoBSComm@PA.gov # # #
State-regulated banks, credit unions, and other financial services companies in Pennsylvania have been called to action and urged to prepare for the switch from LIBOR. In a letter issued by Robin L Wiessmann , Harrisburg Secretary of the Alternative Reference Rates Committee , firms were warned that delaying the transition to an alternative index will exacerbated the risks associated with the discontinuation of LIBOR. Relevant document: Letter issued by Robin Wiessmann , Pennsylvania Secretary of Banking and Securities ~ 25-Jul-19