The Treasurer April/May 2018

Few in the corporate treasury world will have missed the fact that a regulatory push away from Libor and towards alternative risk-free reference rates is afoot. As regulatory issues go, the practical implications of this transition are, by any sensible measure, immense. Consultants Oliver Wyman estimate that contracts worth an aggregate $240 trillion use Libor as a reference rate. Any corporate with a loan that references Libor, or interest rate or cross-currency swaps, or repos, or commercial paper in issue, will be impacted. OTC derivatives, bonds and floating-rate notes - the list goes on, but you get the picture. The collective search for alternative risk-free benchmarks is ongoing, as is debate around the possibilities, but consensus does not look easy. The EU recently rejected the prospect of transitioning to EONIA, for instance. Meanwhile the ICE Benchmark Administration, the Libor administrator since 2014, pledged to keep improving it in a recent press release. If ever there was an issue where treasurers might want to join the lobbying effort, it is this one. As Sarah Boyce, the ACT's associate policy and technical director, describes on page 26, the views of corporate treasurers are actively being sought on the Sterling Risk Free Rates Working Group's corporate forum. The issue will be debated at the ACT Annual Conference in Liverpool in May, and members can also access a dedicated benchmark reform resource page at The ACT and the Loan Market Association have produced a joint guide on Libor developments, which can also be found on the benchmark reform page. As ACT chief executive Caroline Stockmann, has said: "The proposed risk-free-rate alternatives are not the same as Libor. These differences, such as pricing gap and the current lack of forward-looking term rates, will impact not only risk management, but also operations and systems. It is important for the corporates to fully understand the implications of the change and we hope the guide will be effective in ensuring that. We actively encourage treasurers to join the conversation and have their voice heard." Elsewhere in this issue, we talk to Paul Wilde, group treasurer at Shawbrook Bank. From rescue and recovery at Lloyd's of London to the financial crisis as seen from the vantage point of RBS, to the break-up of ABN Amro's treasury, Wilde has seen his fair share of distressed situations. It is not the employer or sector that provides you with job security, he points out, it is the skills and experience you accrue. I hope you enjoy the issue. -Liz Loxton, editor of The Treasurer

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