Ready for LIBOR’s 2021 Sunset?
Ready or not, 2021 will mark the end of the London Interbank Offer Rate (“LIBOR”). Those financial institutions who have long pegged their interest rates based on LIBOR for the more than $240 trillion in mortgages, SWAPS, credit products, and other loans and derivatives contracts are considering their next steps
The transition from LIBOR to alternative rate benchmarks that have been created will generate risks for financial institutions. Fall-back clauses within contracts were never intended to support an entire benchmark cessation. Switching to a new underlying interest rate benchmark is tough enough and can produce significant gains or losses for banks depending upon individual contract terms. Further, just locating and identifying all of the individually structured contracts pegged in some way to LIBOR can be cumbersome, time consuming and even overwhelming, and can magnify banks’ risk exposure.
Do you have a strategic plan to identify, collate, analyze and comprehensively, but individually, transition all of your LIBOR-linked financial products and contracts to your chosen alternative rate?
Synechron can help! We have developed an Accelerator specifically designed to ease your LIBOR transition. Synechron’s proprietary Data Science Accelerator for LIBOR Impact Analysis was built to:
- Identify LIBOR exposure across financial services firms’ global contracts.
- Analyze the specific points of impact and their full magnitude.
- Determine the scale of that impact across various LIBOR alternative rate benchmarks, on a contract-by-contract basis.
- Utilize state-of-the-art technology including Optical Character Recognition and Natural Language Processing. These learn-as-they-go technologies flag and read both structured and unstructured contracts and facilitate impact assessments.
- Allow for quicker, easier re-evaluations using alternative rates and different combinations of mathematical adjustments.
- Provide a full view of the impact scale of switching to various alternative benchmark rates.
To learn more about how Synechron’s technology can significantly help with your LIBOR transition, may we suggest you read:
- The exciting news announcing our LIBOR Data Science Accelerator as well as updates from our global Data Science Center of Excellence (COE)
- LIBOR Accelerator business case and solution overview
- Our recent insights on LIBOR benchmark alternatives such as IBOR and how to prepare
Synechron’s dedicated team of business consulting, technology, IT architecture, data science, AI/machine learning, cloud migration, regulatory compliance and user experience experts, have helped financial services firms implement digital-first accelerators and integrate the newest tools to address a wide range of challenges, alleviate their technology operational pain points and greatly accelerate digital competencies.