Euribor overhaul to attract more banks starts in May
File photo: U.S. dollar and Euro notes are seen in this November 7, 2016 picture illustration. REUTERS/Dado Ruvic/Illustration/ File photo
By Huw Jones
LONDON (Reuters) – Administrators of the Euribor bank-to-bank lending rate said on Wednesday they will roll out planned changes from May, in a move that could mean more banks contributing to a benchmark used in products from mortgages to car loans worth trillions of euros.
After a series of rigging scandals shredded the reputation of interbank rates, Euribor’s larger cousin Libor was switched off, largely replaced with overnight rates compiled by the Federal Reserve, European Central Bank or Bank of England.
Revamping the Euro Interbank Offered Rate, as Euribor is officially known, aims to reduce the burden on institutions that provide input by using a standardised approach.
The Brussels-based European Money Markets Institute (EMMI), which administers Euribor, proposed reforms to the benchmark last October, and on Wednesday confirmed they will go ahead after an “overwhelmingly positive response”.
“There are no major changes compared to the proposal we had consulted on. We have only introduced an additional control parameter to cater for exceptionally adverse market conditions, but this change is not considered as material,” Jean-Louis Schirmann, CEO of EMMI, said in a statement.
The core reform scraps a requirement for participating banks to provide bespoke estimates in certain circumstances when actual borrowing or lending does not take place, thus saving time and costs for banks.
EMMI said it has decided to implement the changes in a phased manner, migrating panel banks from the current to the new calculation methodology one by one.
This gradual phase-in is expected to start around mid-May 2024 and take place across a six-month period, EMMI said.
Responses to the consultation showed that the reforms could potentially enlarge the number of banks contributing to Euribor, EMMI said.
