Enigma is dedicated and committed to serve and support its clients in the financial transaction chain. The IBOR phase out will have a large impact on all clients groups (both corporates as well as financials).
We are recognized in the market as an experienced transition manager for large scale regulation reforms in the financial transaction chain, such as SEPA, PSD2, Instant Payments. Enigma builds upon that experience and follows a multi-level approach to support both financial institutions as corporates to “absorb” the effects of the IBOR phase out. Enigma Consulting has developed a tailor-made proposition to support corporates throughout the IBOR Transition.
Context
For more than 40 years, Interbank Offering Rates (“IBOR”) have been benchmark rates that banks are charging each other for unsecured lending. IBORs have also been used as a benchmark rate for pricing and valuing bonds, derivatives, mortgages and other instruments. The IBOR rates are being determined by a panel of banks and have been exposed to fraud in recent years. To counter the fraud, global working groups are set up to define a new reference rate and system. IBOR will disappear by the end of 2021 and will be replaced by secured or unsecured transaction-based alternative Risk-free Rates (RFRs). By the end of 2019 EURIBOR started to use a hybrid-calculation and transformed from a ‘quote-based’ to a ‘transaction-based’ methodology. On October 2nd 2019, ECB launched an alternative for the EURO overnight rate (EONIA) called ‘Ester which is transaction-based as well.
Your impact could be substantial
As the deadline comes closer you need to know your level of exposure and impact in order to prevent surprises. You will need to understand the impact of the IBOR transition on your TMS, ERP systems, your credit facilities, bank loans, cash pooling, bonds, ISDA and I/C agreements yourself. This will give you the information to be the proper sparring partner for the banks in the period until the deadline arrives
The Enigma Approach
Enigma Consulting has developed a tailor-made proposition to support corporates throughout the IBOR Transition. We identified three phases: Assess, Plan and Act. An engine has been developed to support our clients in the Assess Phase
The Enigma IBOR Engine
Enigma’s IBOR Engine provides corporates with an integrated IBOR impact overview, and deep insights The Engine scores and visualises IBOR impact, enabling corporates to be better prepared for their interaction with their various banks. The tool is tailored to corporates that are:
- both stock market listed and not stock market listed;
- internationally active and deal with foreign currencies;
- externally financed (public and/or over-the-counter);
- use cash management techniques such as cash pooling.
The Enigma
Experience
Next to our approach towards corporates, Enigma has been and is closely involved in advising banks in getting ready for IBOR. We have been advising banks on the strategic repositioning of cash management and lending products using IBOR, the definition of overall migration strategies, both domestic and worldwide, and organizational migration set-up including training of staff.
IBOR brochure
