Notice of changes interest rate benchmarks

... min read Listen

Specific interest rate benchmarks including LIBOR and EONIA will be discontinued and replaced with alternative benchmark rates which meet new regulatory and market requirements, whereas EURIBOR has been reformed and will remain for the foreseeable future. If any of your financial products or internal processes refer to these rates or other interest rate benchmarks, the following information is relevant for you.

What is changing?

Currently, the transition to the new rates is in full swing, with the majority of deadlines being at the end of 2021. This overview shows how ING, in line with regulatory guidance, is implementing these transitions and where new products based on risk free rates are already available.

GBP LIBOR GBP LIBOR

  • ING no longer offers new contracts based on GBP LIBOR.
  • ING offers a variety of products based on SONIA or other alternative rates.
  • The FCA requires the publication of a synthetic GBP LIBOR after 31 December 2021 for 1-, 3-, and 6-months tenors, to be reviewed after one year. While these rates may be available for legacy GBP LIBOR contracts, the FCA has emphasised that market participants should continue to actively transition contracts from GBP LIBOR.
  • In line with regulatory guidance, it remains ING’s intention to actively transition all of its legacy GBP LIBOR contracts.

JPY LIBOR JPY LIBOR

  • ING will stop offering new contracts based on JPY LIBOR after 31 December 2021.
  • ING offers a variety of products based on TONAR or other alternative rates.
  • The FCA requires the publication of a synthetic JPY LIBOR after 31 December 2021 for the 1-, 3-, and 6-months tenors, for only one year. While these rates may be available for legacy JPY LIBOR contracts, the FCA has emphasised that market participants continue to actively transition contracts from JPY LIBOR;
  • In line with regulatory guidance, it remains ING’s intention to actively transition all of its legacy JPY LIBOR contracts.

CHF LIBOR CHF LIBOR

  • ING will stop offering new contracts based on CHF LIBOR after 31 December 2021.
  • ING offers a variety of products based on SARON or other alternative rates.
  • The EU statutory replacement for CHF LIBOR will take effect from 1 January 2022, for those contracts between EU counterparties that do not include (suitable) fallback provisions, independent whether these contracts are governed by EU or a third country law. The statutory replacement is based on compounded SARON last reset.
  • In line with regulatory guidance, where appropriate, it remains ING's intention to actively transition all of its legacy CHF LIBOR contracts.

USD LIBOR USD LIBOR

  • From 1 January 2022, ING will no longer enter into new USD LIBOR contracts (including for the avoidance of doubt, contracts expiring before the 30 June 2023), with limited exceptions as set out by regulators in the US and UK.
  • ING offers a variety of products based on SOFR or other alternative rates.
  • In line with regulatory guidance, it is ING’s intention to actively transition all of its legacy USD LIBOR contracts before 30 June 2023. Thereafter USD LIBOR will no longer be published.

EONIA EONIA

  • ING will stop offering new contracts based on EONIA after 31 December 2021.
  • ING offers a variety of products based on €STR or other alternative rates.
  • The EU statutory replacement for EONIA will take effect from 3rd of January 2022, for those contracts between EU counterparties that do not include (suitable) fallback provisions, independent of whether these contracts are governed by EU or a third country law. The statutory replacement is based on the €STR plus a spread of 8.5 basis points.
  • The ISDA has released the ISDA 2021 EONIA Collateral Agreement Fallbacks Protocol and offers market participants an efficient way to amend the terms of certain ISDA collateral agreements to incorporate a fallback to €STR plus 8.5 basis points upon the cessation of EONIA. ING adhered to this ISDA EONIA Protocol.

    The reform of EURIBOR was successfully completed in 2019 and it is expected that EURIBOR remains in place for the foreseeable future.

What does this mean for you?

For a long time, regulators have made it clear that some benchmark rates are to be discontinued and replaced with alternative benchmark rates that meet the new regulatory and market requirements. This may impact the products and services currently made available to you and those that we may provide in the future. Also, existing products may need to be transitioned to accommodate a switch to alternative benchmark rates. We will inform you if and in what timeframe this applies to you.

We encourage you to familiarise yourself with the new interest rate benchmarks. Some links are provided below and frequently asked questions, to give you an overview of the main interest rate benchmarks that are subject to the transition.

You may want to engage independent consultants for example for legal, tax and accounting advice to review the contractual terms governing your exposures that mature beyond 2021 and assess the robustness of any fallback language. You may also want to consider the potential impact of the IBOR discontinuation on your business from an accounting, tax and regulatory perspective as well as the impact on treasury and risk management systems and processes.

How is ING responding to this?

ING welcomes the move to more robust and reliable benchmark rates, and is working with regulators, industry bodies and trade associations to facilitate a smooth transition. We are closely monitoring developments and will continue to update you throughout the various transitions and timelines.

It is important for our clients and ING and our clients to ensure the continuity of IBOR linked contracts. Depending on your location, you will be informed about IBOR linked products that require updating.

Fallback Plan

The Benchmark Regulation mentioned above requires ING to have a robust plan that sets out the actions we will take in case a benchmark rate ceases to exist or materially changes. Each ING legal entity has a Fallback Plan. The Dutch Authority for Financial Markets monitors the Fallback Plan of ING Bank N.V. which can be found here:

Benchmark regulation – Robust written plan - ING Bank N.V. (PDF 0,1 MB)

Questions?

We will continue to update you one this topic via our frequently asked questions and refer you the various websites above for more information. The information on this site is not intended to be a complete or an exhaustive overview.

Back to top