Replacing the world’s most widely used interest rate benchmark.

We encourage you to closely review this informational page if you have a LIBOR-based loan with Banc of California.

What is LIBOR?

LIBOR has been used globally as a benchmark to gauge funding costs and investment returns for financial contracts for more than three decades. It is used to help set the interest rates on many loans, swaps, bonds, credit cards, adjustable rate mortgages, and other products offered by financial institutions.

Why is LIBOR being phased out?

Changing industry norms and LIBOR manipulation scandals are driving a shift away from LIBOR, causing regulators globally to actively advocate that markets move away from LIBOR to a more reliable index.

How is Banc of California preparing for the LIBOR transition?

Banc of California has dedicated a team to this transition, is active in many industry working groups and is closely engaged with market activities. No action is required of clients at this time. Banc of California will provide further updates and new documents or amendments to existing documents to facilitate the transition as replacement reference rates are identified and implemented in the financial industry generally.

Frequently Asked Questions

What are the alternative rates to LIBOR?

Neither the industry nor Banc of California has found a perfect replacement for LIBOR yet. While certain rates receive many of the headlines, additional alternatives are still being considered.

The Alternative Reference Rates Committee (ARRC), an industry group convened by the Federal Reserve Board and the New York Fed, recommends using the Secured Overnight Financing Rate (SOFR). Other alternatives include AMERIBOR, Constant Maturity Treasury Series (CMTs), Prime and other potential reference rates suitable for replacing LIBOR, depending upon loan type.

How will the transition from LIBOR impact my loan?

Generally speaking, loan documentation provides that if LIBOR is no longer available, an alternative reference rate will be utilized and the loan documents will be amended to incorporate a new reference rate. In selecting the new reference rate, due consideration will be given to (a) recommendations made by the Federal Reserve or other applicable governing bodies, or (b) evolving or then prevailing market conventions for determining a replacement rate.

What is the timing of the transition from LIBOR?

On March 5, 2021, the United Kingdom’s Financial Conduct Authority (FCA), the regulator of LIBOR, confirmed that USD overnight and 1, 3, 6, and 12-month settings will either cease to be provided by any administrator or no longer be representative immediately after June 30, 2023.

Where can I get additional information on the transition from LIBOR?

The FCA www.fca.org.uk and the ICE Benchmark Administration (IBA) www.theice.com/iba/libor websites contain detailed information on the transition from LIBOR.