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Announcement


LIBOR Transition

Affin Bank Berhad and Affin Islamic Bank Berhad will no longer be offering any contracts with reference to LIBOR that will mature beyond December 2021. This is due to a world-wide effort by financial supervisory authorities and Banks to deal in LIBOR by end of 2021 because the following LIBOR benchmarks to quote and price such contracts will be discontinued on the following two separate dates.
  • 31 December 2021, for Sterling, Euro, Swiss Franc and Japanese Yen LIBOR settings in all tenors, and US Dollar LIBOR 1-week and 2-month settings; and
  • 30 June 2023, for US Dollar LIBOR Overnight, 1-month, 3-month, 6-month and 12-month settings.
Customers are advised that dealing in other Interbank Offer Rate even for currencies not quoted above will be affected by a similar discontinuance timeline.

Affin Bank Berhad and Affin Islamic Bank Berhad welcomes any inquiries from affected customers who has outstanding loans referenced to LIBOR and any of the benchmarks indicated above.

Frequently Asked Questions

(1) What are IBOR rates?

Interbank Offered Rates (IBORs), including the London Interbank Offer Rate (LIBOR) and Kuala Lumpur Interbank Offer Rate (KLIBOR), serve as widely accepted benchmark interest rates that represent the cost of short-‚Äčterm, unsecured, wholesale borrowing by large globally active banks.

LIBOR is based on bank contributions, which are averaged and published for a variety of currencies and tenors associated with these IBOR benchmarks.

(2) Why the Reform of IBOR benchmarks?

However, such bank contributions run a moral hazard. Libor fixing was found by the courts and supervisory authorities that it acted like a cartel - The scandal arose when it was discovered that banks were falsely inflating or deflating their rates so as to profit from trades against clients.

Since then, especially after the Global Financial Crisis of 2008, the number of transactions has fallen rapidly due to the increase in risk to lend.

Because there is such a high number of IBOR-based transactions outstanding amounting to USD370trillion that is at risk, the Financial Stability Board required banks and the central banks to reform the benchmark.

(3) What is happening?

In 2017, the Financial Conduct Authority (FCA; the UK body that regulates LIBOR) declared that after 31 December 2021 it will no longer compel banks to continue making LIBOR submissions.

On 5 March 2021, the Financial Conduct Authority (FCA), the UK regulator, announced that all LIBOR settings for all currencies will either cease or no longer be representative immediately after the following dates:
  • 31 December 2021, for Sterling, Euro, Swiss Franc and Japanese Yen LIBOR settings in all tenors, and US Dollar LIBOR 1-week and 2-month settings; and
  • 30 June 2023, for US Dollar LIBOR Overnight, 1-month, 3-month, 6-month and 12-month settings.
Similarly in Malaysia, Bank Negara Malaysia is now working together with the Financial Markets Committee to determine what is the timeline for cessation of KLIBOR. They had just completed a survey in June 2021 to obtain market opinion. Affin Bank Berhad and Affin Islamic Bank Berhad have halted dealing in 2M and 12M KLIBOR tenors by 30th September 2021 because these two KLIBOR benchmarks will be discontinued by Bank Negara Malaysia on 1 January 2023. Until we receive further notification from Bank Negara Malaysia, Affin Bank Berhad and Affin Islamic Bank Berhad will continue to deal in 1M, 3M and 6M KLIBOR. Clients are advised that these remaining KLIBOR benchmarks will eventually be discontinued in the near future.

(4) What should we do to prepare for it?

Customers are advised to start approaching Affin Bank Berhad and Affin Islamic Bank Berhad to discuss your options moving forward for any of your loan contracts referenced to LIBOR and KLIBOR;
The Bank will assist you to:-
  • Identify all your affected exposures
  • Discuss your transition paths
  • Renegotiate existing contracts
  • Affin Bank Berhad and Affin Islamic Bank Berhad will cease to enter into any LIBOR contracts maturing beyond December 2021. For clients who are interested to know more, please call your account officer or relationship manager to discuss your borrowing options moving forward.
Click here for LIBOR e-Brochure
 

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