OUR NETWORK
Find our ATMs, Service-Centers, Cash Payment Terminals and other physical touchpoints on an interactive map
From June 30, 2023, the USD LIBOR (London Interbank Offered Rate) index will be canceled, namely on March 5, 2021, the Financial Supervision Agency of Great Britain (FCA) confirmed the dates according to which the public index USD LIBOR will cease to exist and will no longer be published.
The interbank exchange rate index is of fundamental importance for many financial contracts, it must be strong, reliable and tailored to the customers' interests as much as possible.
The Financial Stability Board (FSB) has advised the global financial industry to reform the interbank foreign exchange index and develop an alternative index that will best suit the current financial environment, and be more liquid and transparent. To ensure the reliability and strength of the interbank currency index, the international market participants and the European legislator defined new criteria and conditions.
From June 30, 2023, USD LIBOR will be replaced by the Term SOFR index:
In the case of the US dollar, instead of the 6-month LIBOR index, the 6-month Term SOFR index will be used;
The USD LIBOR index has determined the weighted average interest rate on interbank loans in the banking system for more than 40 years. Throughout this time, USD LIBOR has been the main reference indicator for adjustable rate loans, mortgages and business loans, as well as determining the change in interest rates for the consumer and reflecting the amount of monthly loan debt.
The index affected any financial activity - including risk and valuation. It was also referred to as "the most important number in the world". However, over the past decade, confidence in the index has significantly weakened and led to a number of crises in the financial sector around the world. These events put into question the performance of the central role and the Financial Conduct Authority of Great Britain (FCA) made a decision to replace the USD LIBOR index with other - safer indices.
The Term SOFR is published by the Federal Reserve Bank of New York for different maturities: one-day, 30-day, 90-day and 180-day rates, which are obtained by weighting the average of observed rates. Data according to maturity are published on the following website: https://www.cmegroup.com/market-data/cme-group-benchmark-administration/term-sofr.html
In the contract, where the USD LIBOR index is specified, it will be replaced by an alternative index that is more reliable, stronger and tailored to the interests of consumers.
The change of Term SOFR is reflected in the interest rate of the loan as follows: the change of the interest rate (public index and base rate) is carried out under the conditions established by the bank credit agreement. A change in the Term SOFR will automatically result in a change in the interest rate not less than the minimum threshold volume of the interest rate. The bank is authorized to inform the client about the aforementioned by means of communication stipulated in the contract.
A number of financial institutions worldwide have already switched to the Term SOFR index. Experts and various regulatory bodies consider it a more accurate and safer index.
The main difference between Term SOFR and USD LIBOR is how the rates are calculated:
Term SOFR is based on actual transactions and is a risk-free index because it is backed by Treasury securities, while USD LIBOR includes interbank credit risk and, along with actual transactions, is subject to expert judgment.
USD LIBOR is a benchmark interest rate that results from trading in the interbank market by major global banks. The said rate is based on the prices of unsecured instruments in the interbank market.
For customers who already use loan products, USD LIBOR will change from June 30, 2023.
You can get detailed information about changes in USD LIBOR, as well as the interbank exchange rate index, at the following links:
