Euribor overhaul to attract more banks will start in May
By Huw Jones and Marc Jones
LONDON (Reuters) - Administrators of the Euribor bank-to-bank lending rate said on Wednesday they would roll out planned changes from May, in a move that could mean more banks contributing to a benchmark used in products from mortgages to car loans worth trillions of euros.
After a series of rigging scandals shredded the reputation of interbank rates, Euribor's larger cousin Libor was switched off, largely replaced with overnight rates compiled by the Federal Reserve, the European Central Bank or the Bank of England.
Revamping the Euro Interbank Offered Rate, as Euribor is officially known, aims to reduce the burden on institutions that provide input by using a standardised approach.
The Brussels-based European Money Markets Institute (EMMI), which administers Euribor, proposed reforms to the benchmark last October, and on Wednesday confirmed they will go ahead after an "overwhelmingly positive response".
"There are no major changes compared to the proposal we had consulted on. We have only introduced an additional control parameter to cater for exceptionally adverse market conditions, but this change is not considered as material," Jean-Louis Schirmann, CEO of EMMI, said.
The core reform scraps a requirement for participating banks to provide bespoke estimates in certain circumstances when actual borrowing or lending does not take place, thus saving time and costs for banks.
"We are quite confident with these changes we will be able to attract more banks," Schirmann told Reuters, adding that EMMI was in "close talks" with some potential joiners.
Schirmann declined to say how many new joiners there could be or how quickly the first could join, but he said improving the geographical diversity of the panel would be beneficial.
For instance, he said there were no banks from Finland, Ireland or Greece currently, while there "could be place for one more" bank from both Germany and Netherlands.
EMMI said it had decided to implement the changes in a phased manner, migrating panel banks from the current to the new calculation methodology one by one.
This gradual phase-in is expected to start around mid-May 2024 and take place across a six-month period, EMMI said.
(Reporting by Huw Jones; Editing by Alison Williams and Milla Nissi)