Information on the industry transition away from LIBOR
For decades the London Interbank Offered Rate (LIBOR) has been one of the world’s most widely used benchmark rates, representing a $200 trillion (USD) global market. However, because LIBOR has lost viability, regulators are requiring a market-wide transition away from LIBOR to alternative rates for all new and existing loans.
How this will impact our customers
The global transition away from LIBOR is evolving, and many details of the transition are still unknown. We are actively monitoring the process for emerging details and are dedicated to being a source of support and information to our customers throughout the process.
If you have an existing loan tied to LIBOR or are looking to obtain a new loan tied to LIBOR, your loan will be affected by this transition, now and into the future. Umpqua Bank is prepared to guide you through this process. We have developed the necessary bank processes, tools and expertise to support this effort, and our priority is to help you understand the transition, the new rates and how these may impact your transactions.
Our LIBOR transition priorities include:
Planning and Preparation to support a positive customer experience
The LIBOR Transition Office, formed in 2019, designated a LIBOR Transition team to lead this bank-wide effort. With oversight from bank executives and participation by business banking leaders, this team is actively monitoring the LIBOR process for industry and regulatory developments, while providing enhanced training to the associates managing your loans.
Simplified and Streamlined processes
Our goal is to minimize the impact to our customers. We have implemented new tools and technology to support this effort, thereby streamlining our processes.
Many LIBOR loans contain provisions for moving to a new index, and you may need to do nothing at all. If your loan documents do not contain those provisions, you will be contacted soon with details of our contract amendment process. In both instances we will provide support to our customers during all phases of the transition from LIBOR to a new index.
Transparency every step of the way
Supported by guidance from regulators, we will continue to provide industry updates and links to emerging information. Our robust communications plan is focused on keeping you informed as the process unfolds. Do not hesitate to reach out if you have questions:
The LIBOR cessation schedule
On March 5, 2021, the Financial Conduct Authority (FCA), the regulator that oversees LIBOR, announced that the publication of LIBOR settings will cease as follows:
On December 31, 2021
All GBP, EUR, CHF and JPY LIBOR settings
1-week and 2-month USD LIBOR settings
On June 30, 2023
Overnight, 1-month, 3-month, 6-month and 12-month USD LIBOR settings
More information on the LIBOR publication termination can be found at:
SOFR is the industry-recommended replacement for LIBOR
In 2014, the Federal Reserve organized the Alternative Reference Rates Committee (ARRC) to facilitate a smooth transition from LIBOR. The ARRC has recommended the use of the Secured Overnight Financing Rate (SOFR) as the replacement for LIBOR.
SOFR is a broad measure of the cost of borrowing cash overnight, collateralized by U.S. Treasury securities in the repurchase agreement market. Published each business day, SOFR is produced by the Federal Reserve Bank of New York, in cooperation with the Office of Financial Research. Detailed information about SOFR can be found in this ARRC publication: An Updated User’s Guide to SOFR.
Umpqua Bank and SOFR
While we have not made a final determination about the rate replacing LIBOR, Umpqua Bank anticipates that existing LIBOR-based loans will be transitioned to SOFR. As we actively monitor market trends and regulatory announcements, we will continue to communicate additional information as it becomes available.
If you would like to discuss the SOFR-based options currently offered by Umpqua Bank, or have an existing LIBOR-based loan that you would like to transition now to SOFR or another acceptable index, please contact your relationship manager to discuss options available to you.
LIBOR transition resources
The Alternative Reference Rates Committee (ARRC)
Find current industry news on the LIBOR transition and SOFR
Federal Reserve Bank of New York
Find SOFR rate data
Find information on the LIBOR transition for swaps and derivatives