Preliminary Notice on London Interbank Offered Rate (“LIBOR”) Transition
Following the recent market developments on the reference rate transition from the London Interbank Offered Rate (“LIBOR”) to alternative benchmark interest rates (including Risk Free Rates (“RFRs”)), Zenith Bank Plc (“the Bank”) like other financial institutions has commenced preparatory activities to transition from LIBOR to alternative benchmark interest rates.
Impacts on Existing Contracts
This transition will affect all existing contracts that reference LIBOR with maturity dates after 30 June 2023. The Bank has constituted a LIBOR Transition Working Committee to champion and coordinate the various activities associated with this transition.
Impacts on Future Contracts
All new contracts executed on or from January 01, 2022 will no longer reference LIBOR. This is because alternative rates will become applicable from that date.
The cessation of LIBOR as a benchmark interest rate will impact the loans, debt securities and/or derivatives, as applicable, that you currently hold with the Bank maturing after 30 June 2023. References in documentation to LIBOR will need to be amended to alternative benchmark rates such as a RFR like Secured Overnight Financing Rate (SOFR), a fixed interest rate, or the Bank’s cost of funds, among other market solutions.
Next Steps for the LIBOR Transition
The Bank is preparing for the transition and has engaged with various stakeholders as well as preparing its systems for a smooth and seamless transition with respect to impacted transactions and accounting in the new benchmark environment.
We hope to keep you updated with developments on the subject matter.
Meanwhile, you may wish to seek guidance from your legal, tax, accounting or financial advisers on the possible implications of the transition. In case of any enquiries, kindly contact your Relationship Manager or email Libortransitioncommittee@zenithbank.com.