City National Bank is actively making preparations to transition away from the London Interbank Offered Rate (LIBOR). Although LIBOR is one of the most widely used interest rate indexes in the U.S. and global financial industry for loans and other products, the U.K.’s Financial Conduct Authority (FCA), the regulator of LIBOR, has called for a worldwide transition away from LIBOR by the end of 2021. The Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation have emphasized that U.S. banks should not enter into new loan contracts using USD LIBOR after Dec. 31, 2021. However, many banks are targeting a date in advance of that to cease issuing or renewing LIBOR-based loans. Regulators are encouraging firms and investors to transition away from the use of LIBOR to new rates as soon as they are able. While the FCA announcement pertained to LIBOR specifically, an industry-wide response triggered an examination more broadly of other interbank offered rates (IBORs).
As of March 2021, the FCA confirmed that the publication of LIBOR on a representative basis will cease for one-week and two-month USD LIBOR after Dec. 31, 2021, and the remaining USD LIBOR settings after June 30, 2023. City National Bank is planning to cease offering LIBOR loans and other products and begin originating loans and other products using alternative reference rates at some point this year. City National Bank plans to offer its clients the option of referencing either the Secured Overnight Financing Rate (SOFR) or the American Interbank Offered Rate (Ameribor) prior to the date that LIBOR’s publication ceases.