Skip to main content
The Actuary: The magazine of the Institute and Faculty of Actuaries - return to the homepage Logo of The Actuary website
  • Search
  • Visit The Actuary Magazine on Facebook
  • Visit The Actuary Magazine on LinkedIn
  • Visit @TheActuaryMag on Twitter
Visit the website of the Institute and Faculty of Actuaries Logo of the Institute and Faculty of Actuaries

Main navigation

  • News
  • Features
    • General Features
    • Interviews
    • Students
    • Opinion
  • Topics
  • Knowledge
    • Business Skills
    • Careers
    • Events
    • Predictions by The Actuary
    • Whitepapers
    • Moody's - Climate Risk Insurers series
    • Webinars
    • Podcasts
  • Jobs
  • IFoA
    • CEO Comment
    • IFoA News
    • People & Social News
    • President Comment
  • Archive
Quick links:
  • Home
  • The Actuary Issues
  • September 2019
09

Most financial firms unprepared for LIBOR transition

Open-access content Tuesday 17th September 2019 — updated 5.50pm, Wednesday 29th April 2020

Less than half of financial services firms are confident about transitioning away from the London Interbank Offered Rate (LIBOR) by the end of 2021, a global survey has uncovered.

2


The findings show that just 47% of companies believe they have the talent and capability to transition within the required timeframe, despite 84% having plans in place.

Only 20% say they are operationally ready, 41% admit to lacking a unified and consistent approach across their business, and just 18% have a "mature" LIBOR transition programme.

"The findings indicate that few firms have a holistic transition approach across business units or geographies," Accenture managing director, Samantha Regan, said.

"Past experience and our data suggest that transformations of this magnitude will be longer, costlier and more complex than anticipated."

As the average interest rate at which banks borrow from one another, LIBOR is linked to around $400trn (£322trn) in financial instruments, including credit swaps and securitisations.

However, regulators are set to phase it out by the end of 2021 following a rate-rigging scandal in 2012.

The survey also found that just 15% of companies believe their legal teams are ready to deal with numerous contract remediation, deal restructuring and repapering activities.

In addition, only 14% are confident that their risk management teams have a detailed understanding of the transition activities and the impact of risk management.

There is also a lack of alignment across geographies, with 47% of firms admitting they are not confident they understand regulatory expectations across jurisdictions.

Moreover, many respondents seemed to think the 2021 deadline would be flexible, with one quarter believe LIBOR will discontinue gradually after that, and half expecting regulators to provide relief.

Around 95% of firms with mature LIBOR plans see the switch as a strategic opportunity, while 91% think incremental revenue gained from transition can offset the remediation cost over three years.

"Firms have a choice: allocating resources and talent just to comply with regulations, or using the transition away from LIBOR to transform their business and create a competitive advantage," said Venetia Woo, Accenture principal director, said.

"There's real revenue and cost reduction opportunities for those willing to take the lead on setting and trading these benchmark rates - using the LIBOR transformation as a backdrop to fix costly, archaic and outdated technology and processes, eliminate product servicing inconsistencies, and stabilise and reinforce their client relationship strategies."


Sign up to our free newsletter here and receive a weekly roundup of news concerning the actuarial profession

This article appeared in our September 2019 issue of The Actuary.
Click here to view this issue
Filed in
09

You might also like...

Share
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print

Latest Jobs

New Fast-Growing Team - Actuarial Systems Development

London (Greater)
Excellent Salary Package
Reference
143762

Actuarial Pension Consultant – Scotland/Remote – Up to £90,000 plus bonus

Edinburgh / Glasgow / Remote working
Up to £90,000 + Bonus
Reference
143761

Part Qualified Pensions Actuary– Specialised Pensions Consultancy - Scotland/Remote - Up to £70,000

Edinburgh / Glasgow / Remote working
Up to £70,000 + Bonus
Reference
143760
See all jobs »
 
 

Today's top reads

 
 

Sign up to our newsletter

News, jobs and updates

Sign up

Subscribe to The Actuary

Receive the print edition straight to your door

Subscribe
Spread-iPad-slantB-june.png

Topics

  • Data Science
  • Investment
  • Risk & ERM
  • Pensions
  • Environment
  • Soft skills
  • General Insurance
  • Regulation Standards
  • Health care
  • Technology
  • Reinsurance
  • Global
  • Life insurance
​
FOLLOW US
The Actuary on LinkedIn
@TheActuaryMag on Twitter
Facebook: The Actuary Magazine
CONTACT US
The Actuary
Tel: (+44) 020 7880 6200
​

IFoA

About IFoA
Become an actuary
IFoA Events
About membership

Information

Privacy Policy
Terms & Conditions
Cookie Policy
Think Green

Get in touch

Contact us
Advertise with us
Subscribe to The Actuary Magazine
Contribute

The Actuary Jobs

Actuarial job search
Pensions jobs
General insurance jobs
Solvency II jobs

© 2023 The Actuary. The Actuary is published on behalf of the Institute and Faculty of Actuaries by Redactive Publishing Limited. All rights reserved. Reproduction of any part is not allowed without written permission.

Redactive Media Group Ltd, 71-75 Shelton Street, London WC2H 9JQ