Our supervision of firms’ transition away from LIBOR is focused on firms effectively managing the risks arising from transition. We have written the following Dear CEO letters setting out our expectations.
Firms’ preparations for transition, September 2018
In 2018, alongside the PRA[1] we wrote sent a joint Dear CEO letter with the PRA to major banks and insurers supervised in the UK, asking for the preparations and actions they are taking to manage the transition from LIBOR to alternative interest rate benchmarks. Based on the responses, we have published a feedback statement to help inform firms’ planning for the cessation of LIBOR.
Next steps on transition progress, January 2020
In January 2020, we sent a joint Dear CEO letter[2] with the PRA to major banks and insurers supervised in the UK, setting out our initial expectations for transition progress during 2020.
In February 2020, we also wrote a Dear CEO Letter to all UK regulated asset management firms[3] setting out our expectations as they prepare for the end of LIBOR.
Expectations on meeting working group milestones, March 2021
In March 2021, our Dear CEO letter[4] with the PRA set out that all firms meet the milestones of the Working Group on Sterling Risk-Free Reference Rates and the targets of other working groups and relevant supervisory authorities, as appropriate. We stressed the importance for firms to determine the specific actions necessary to mitigate safety and soundness risks from their exposures to LIBOR, to ensure good client outcomes and to preserve market integrity.
We encourage all firms (even those which are not banks, insurers or asset managers) who currently rely on LIBOR to read, reflect and act on these communications. We expect them to take all reasonable steps to ensure the end of LIBOR does not lead to markets being disrupted or harm to consumers, and to support industry initiatives to ensure a smooth transition.