The transition away from LIBOR.
The London Interbank Offered Rate (LIBOR) has been relied upon worldwide since 1970 for setting interest rates on syndicated loans, corporate debt, consumer loans, interest rate swaps and other derivatives. Following the 'LIBOR scandal' of 2008, the UK Financial Conduct Authority took over the regulation and administration of the rate, and no manipulation has emerged since 2013. Nevertheless, the United Kingdom and United States are determined to replace LIBOR.
COVID-19 could prompt the US Fed to increase its support to the repo market, exacerbating fears that SOFR is not market determined.
The scale and duration of COVID-19-related economic disruptions loom over banking sector profitability.
Banks will struggle to balance immediate priorities triggered by COVID-19, and the need to devote staff and funds to the LIBOR transition.
