Preparing for the

Libor Transition

Interbank Offered Rates (IBORs)* are expected to be replaced by new Risk-Free Rates (RFRs) across the global financial markets. Based on statements by the Financial Conduct Authority (FCA), the expectation is that the London Interbank Offered Rate (LIBOR) will no longer be a credible lending rate. Banks are being urged to stop using LIBOR well in advance of the 2021 deadline and plans are being progressed on complying with this. Further information will be shared in due course and clients with LIBOR linked facilities will be contacted about the transition to alternative rates. Work is also underway for the replacement of other global IBORs and external working groups have been set up to consider alternative RFRs. Please visit the Bank of England's website to see more detail of the UK’s plans.


If you have a LIBOR-linked facility (see explanation below), you may wish to consider an alternative; like switching to Bank of England Base Rate. We anticipate that new Risk-Free Rates will be available, such as SONIA (see explanation below). We are exploring the alternatives for our clients who currently have LIBOR-linked facilities.

A LIBOR-linked facility is when the rate applied to your facility is linked to prevailing LIBOR rates.

The Bank of England Base Rate, set by the Monetary Policy Committee, is the key benchmark for interest, mortgage and savings rates. 

SONIA (Sterling Over Night Indexed Average) is an overnight rate, that is based on actual transactions and reflects the average of the interest rates that banks pay to borrow sterling overnight from other financial institutions.

The Bank of England is the administrator for SONIA and takes responsibility for its governance and publication every London business day. SONIA is used to value around £30 trillion of assets each year. It is the preferred benchmark recommended by the Bank of England Working Group on Sterling Risk Free Reference Rates for the transition to sterling risk-free rates from LIBOR.


While the market for alternatives rates is still developing, LIBOR continues to an accepted benchmark for corporate, commercial and personal financial products.

For new or existing LIBOR–linked facilities,  the global financial markets are working together to agree how best to transition to the alternatives by the end of 2021, or in some cases earlier.

If you are considering renewing or opening new LIBOR-linked facilities, please ensure you read our Client Disclosure Document prior to opening any facilities.

We will be contacting all clients later this year about their specific facilities and what options they have.

If you have investment funds or portfolios, you may wish to check if you hold any LIBOR-linked assets. The issuers of the assets will be responsible for reviewing these assets and taking the appropriate action.

In the meantime, if you have any questions, or would like to start considering alternative options for the LIBOR-linked facilities that you hold with us, please do contact your wealth manager who’ll be happy to help.

Alternatively, you may wish to seek advice from an independent professional advisor, such as an accountant or lawyer, to help assess what the changes may mean for you. 

The alternative Risk-Free Rates are being considered for all IBOR currencies by the Bank of England Working Groups and are expected to be as per below:

* IBOR is the interest rate at which banks lend to and borrow from one another in the interbank market. LIBOR is one of a number of IBORs, it's calculated and published daily across five currencies (GBP, USD, EUR, JPY and CHF) and seven maturities (overnight, one week, and 1, 2, 3, 6 and 12 months) by the  Intercontinental Exchange Benchmark Administrator (ICE BA). 

The information provided on our website is to help you understand the changes; however this does not constitute financial or legal advice

Adam & Company. is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.  Registered in Scotland  No 83026. Registered office 6-8 George Street, Edinburgh EH2 2PF

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