Remember Libor transition? In the chaos of the last month the topic that has, or should have been, top of mind at many banks has been overrun by the panic and dislocation that the spread of Covid-19 has wrought in the capital markets.
Most bankers, now fighting fires on all fronts, would dearly love to be able to park this issue for the foreseeable future while they try to deal with the impact of a sudden global economic stop on their clients’ and their own businesses.
But it is not to be.
In a statement on March 25, the Financial Conduct Authority, the Bank of England and the Working Group on Risk Free Reference Rates confirmed that “the central assumption that firms cannot rely on Libor being published after the end of 2021 has not changed.”
Given that this deadline was already viewed by the market as challenging but not impossible, sticking to it in the current circumstances seems delusional and suggests that, like the UK government at the start of the year, UK regulators are still in denial about the impact of the virus.