Replacement of interest rate benchmarks

If in any of your products reference is made to interest rate benchmarks such as EURIBOR, LIBOR and/or EONIA, this applies to you.

What are Interest rate benchmarks?

Interest rate benchmarks are being used as a standard to determine prices in financial agreements and financial instruments. Therefore, these benchmarks need to be robust, reliable and fit for purpose. European law, in the form of the Benchmark Regulation, includes rules in order to ensure this and aims to improve the functioning and governance of benchmarks.

What is about to change?

Banks, among which ABN AMRO Bank N.V., are only allowed to use benchmarks that are included in a public register. In order to get included in this register, benchmarks need to meet certain requirements. If benchmarks do not meet these requirements they can no longer be used. It is also possible that certain benchmarks cease to exist and will be replaced by an alternative benchmark.

What does this mean for you?

These changes may have an impact on the financial agreements you have with us that refer to interest rate benchmarks. We might need to use an alternative benchmark. If this applies to you, we will duly inform you. At this time however most interest rate benchmarks to which we refer in our financial agreements can still be used, at least until 31 December 2021.

Fallback Plan

We need to have solid plans available pursuant to the aforementioned Benchmark Regulation for the event that benchmarks cease to exist or materially change. For this purpose we have a Fallback Plan. The Dutch Authority for Financial Markets monitors this Fallback Plan.

In this Fallback Plan ABN AMRO Bank N.V. sets out its internal procedures which need to be followed and actions that need to be taken in case a benchmark materially changes or ceases to be provided. The Fallback Plan ensures that ABN AMRO Bank N.V. investigates possible solutions, follows market practice as much as possible and performs an impact assessment when designating an alternative benchmark which will replace a benchmark.

The Fallback Plan will be updated from time to time as more information becomes available in the market. Pursuant to the Benchmark Regulation, the Fallback Plan should nominate (where feasible and appropriate) one or several alternative benchmarks that could be referenced to substitute the benchmarks no longer provided and should indicate why such benchmarks would be suitable alternatives. As it is still unclear in the market what alternative benchmark(s) will substitute the benchmarks, the current version of the Fallback Plan does not indicate alternative benchmarks.

Any further questions?

Should you have any further questions, please do not hesitate to contact us, preferable via your Relationship Manager.

More information

Dutch Banking Association – Interest benchmarks: what are the developments? (Dutch only)