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Singapore moves to switch bank lending rate benchmarks

SINGAPORE, Aug 30 (Reuters) - Singapore's banking body on Friday said it would shift away from using Singapore dollar swap offer rates (SOR) as a key lending benchmark due to likely discontinution of the London Interbank Offered Rate, which heavily influences SOR.

The change, which will take place over the next two years, will see products such as loans that reference the rate switched to other benchmarks such as Singapore Overnight Rate Average (SORA), Singapore Interbank Offered Rates (SIBOR) or banks' internal funding rates.

"Such a shift is necessary given the likely discontinuation of USD LIBOR, following the announcement by the UK regulatory authorities that the benchmark will not be sustained by regulatory powers after end-2021," the Association of Banks in Singapore and the Singapore Foreign Exchange Market Committee said in a statement. SOR relies on USD LIBOR in its computation methodology.

The group has identified SORA as the best alternative and the central bank has set up an industry-led committee to work with businesses and customers to smooth the transition. (Reporting by John Geddie Editing by Sam Holmes)