The end of this year marks a big change for financial institutions worldwide with the elimination of LIBOR as a base rate. LIBOR, or London Interbank Offered Rate, has been around for almost fifty years as a reference rate, or index, that many banks around the world have relied on for a wide range of financial products. The upcoming elimination of LIBOR will affect banks and borrowers significantly.
Mark Meloy, CEO of First Business Bank, speaks with Ed Sloane, Chief Financial Officer of First Business Financial Services, Inc. and Bill Uelmen, President – Bank Consulting at First Business Bank, about the role of LIBOR and its likely replacement, SOFR (Security Overnight Funding Rate). This discussion focuses on:
- The products and services LIBOR impacts
- The risk to banks and borrowers without LIBOR
- SOFR as a potential replacement index in 2021