LIBOR Transition

New lending based on LIBOR is expected to cease by the end of 2021. Stay up to date on the latest developments, key dates, and how M&T is preparing for the transition.

M&T Bank has created a dedicated LIBOR Transition Office.

With a dedicated LIBOR Transition Office, M&T is committing extensive resources toward making the necessary investments in systems, personnel, and processes required to develop best-in-class client solutions. Understanding how this impacts M&T Bank clients with LIBOR-priced credit facilities is important, and we are here to help you navigate your options. 

We'll be sure to provide updates on the LIBOR transition from the Alternative Reference Rate Committee (ARRC), convened by the Federal Reserve Board and Federal Reserve Bank of New Yorkas well as guidance on its recommended alternative – the Secured Overnight Financing Rate (SOFR).

The information made publicly available via the resources referenced on this page are for informational purposes only, and should NOT be viewed or construed as legal, accounting, tax or other professional advice. Readers should consult with their own professional advisors to discuss any information provided herein. M&T Bank is not endorsing any third party sources cited herein, and makes no representations or warranties about the accuracy or completeness of any information contained herein.

If you have questions, contact your M&T Relationship Manager.

 

View our LIBOR resources and insights.

Life After LIBOR

What the anticipated replacement of LIBOR as a benchmark index means for you, your business and your banking relationship.

Read More >

Resources & Insights

LIBOR Preparation

How M&T Bank will help you prepare to navigate your options during the LIBOR transition.
Read Article >
Resources & Insights

LIBOR Foundational Knowledge

The market needs a new benchmark interest rate. Learn the recommended alternative for USD LIBOR and what other rates were considered.
Read Article >
Resources & Insights

Comparing LIBOR to SOFR

There are some key differences between LIBOR and SOFR which are important to understand.
Read Article >

LIBOR Frequently Asked Questions

The London Interbank Offered Rate (LIBOR) is intended to represent the average interest rate at which a certain group of contributing global banks can obtain funding in the London interbank market. For decades, LIBOR has been and continues to be the primary global short-term interest rate benchmark. US Dollar LIBOR is used by M&T Bank and other financial institutions as a measure of its short-term cost of funds.

Global money markets were disrupted and fundamentally changed following the Great Recession, which began with the 2007 U.S. housing market downturn and prompted the Federal Reserve Bank and other central banks to intervene. Consequently, the number of interbank funding transactions in the LIBOR market declined, and the basis for determining LIBOR was and remains increasingly based on “expert judgment” rather than actual transactions. In addition, several large global banks involved with providing data used to set LIBOR have been accused of manipulating LIBOR during the same time-period. These issues have led bank regulators to begin looking for a replacement for LIBOR.

The U.K. Financial Conduct Authority (“FCA”, the regulator of LIBOR) and the ICE Benchmark Administration (“IBA”, the administrator of LIBOR) announced on March 5, 2021, that the IBA will cease publication of USD LIBOR for the overnight, 1-month, 3-month, 6-month and 12-month tenors immediately following the IBA publication thereof on June 30, 2023; and cease publication of the 1-week and 2-month USD LIBOR tenors following the publication thereof on December 31, 2021.  The respective announcements by the FCA and the IBA, along with a statement issued by the Alternative Reference Rates Committee (ARRC), are linked here for your convenience.

Notwithstanding the continued publication of certain commonly-utilized tenors of USD LIBOR through June 30, 2023, U.S. regulatory agencies (including the Federal Reserve Board, M&T Bank’s regulator) have issued guidance encouraging banks to cease entering into new loan agreements using US LIBOR as a reference rate as soon as practicable and in any event by December 31, 2021.  M&T Bank does not anticipate making any US LIBOR loans after the end of 2021, and is currently preparing to offer non-LIBOR pricing in the second half of 2021. 

M&T, like all diligent market participants, continues to carefully monitor industry developments regarding the anticipated discontinuance of LIBOR.  While most existing LIBOR loan agreements include provisions for a fallback interest rate if LIBOR were to become unavailable or indeterminable, that contractual fallback rate – typically a Prime-based rate – may not be viewed by the customer (or M&T) as an ideal or desirable long-term replacement rate for an existing LIBOR loan.  As the market identifies preferable alternatives, including the Secured Overnight Financing Rate (SOFR) and other emerging benchmarks, we will continue to share information and initiate meaningful discussions with our customers about transitioning from LIBOR to a replacement benchmark with appropriate spread adjustments – and seek to implement those changes in a manner that meets the needs and expectations of both M&T and its customers.

 

 

An existing LIBOR loan will cease to be a LIBOR loan when LIBOR no longer exists.  If no action is taken prior to LIBOR cessation, your loan rate will likely convert to a Prime-based rate (as per the terms of your loan documents) – but that may not be a desirable outcome.  To avoid that and achieve a better outcome, your loan documents must be amended to either (a) convert immediately to a replacement index and rate, or (b) include new “hardwired” fallback language that will provide for an automatic future conversion to a preferable replacement index and rate following LIBOR’s discontinuance.

If your existing LIBOR loan is hedged (with a swap, cap, collar, etc.), your hedging agreement will also need to be amended.  This can be accomplished by adhering to the ISDA 2020 IBOR Fallbacks Protocol, which effectively incorporates a hardwired fallback to a replacement index and rate. M&T has already adhered to the Protocol.  You should consider doing so as well – but only after consulting with your own legal, tax, financing and accounting advisors.

Your M&T Relationship Manger will be reaching out to you soon, to start discussing the transition away from LIBOR.

Additional ARRC Resources

You can expect to hear more from M&T Bank soon as the details of the transition take shape. 

All loans, lines of credit, and all terms referenced herein are subject to receipt of a complete M&T application, credit approval and other conditions. Other terms, conditions, fees and restrictions may apply.​
Unless otherwise specified, all advertised offers and terms and conditions of accounts and services are subject to change at any time without notice. After an account is opened or service begins, it is subject to its features, conditions and terms, which are subject to change at any time in accordance with applicable laws and agreements. Please contact an M&T representative for full details.