Pub. 2 2021 Issue 5

cbak.com 16 In Touch BY CHRISTOPHER ROCKERS, NICHOLAS KENNEY AND ANI KAUFMANN MAMISASHVILI, HUSCH BLACKWELL, LLP Prepare for the LIBOR Transition: What Kansas Community Banks Need to Do Now T he use of LIBOR is drawing to an end. For decades, financial institutions have used LIBOR (the London Interbank Offered Rate) as the prevailing reference rate for determining interest rates in commercial and financial transactions. As a response to the manipulation of LIBOR almost a decade ago, the United Kingdom’s Financial Conduct Authority (the FCA) announced in 2017 it did not expect LIBOR to be an acceptable benchmark for floating interest rates beyond 2021. Although the LIBOR transition is still in process, there are some settled ways to deal with the transition and trends in the replacement rate for LIBOR. Preparing now for this transition is important. I. Current State of LIBOR LIBOR is calculated from estimates submitted by a panel of leading London banks. Today, commercial contracts totaling nearly $200 trillion use LIBOR as a “benchmark.”

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