2022 Outlook: The race to June 2023 is on

Despite ongoing enhancements to LIBOR reform disclosures, there are real risks posed to banks and companies by LIBOR’s discontinuation

For a stable transition from LIBOR to a new reference rate, various regulatory bodies, including the SEC, expect adequate disclosures on the preparations organizations are making. To monitor LIBOR reform developments, KPMG tracked the efforts of top- and mid-tier U.S. banks, as well as some corporates in various industries.

The level of effort required to evaluate the impact of transition away from LIBOR is extensive, and the effects on a company’s financial statements are broad. Many outstanding LIBOR contracts require negotiations between borrower and lender to conclude on a new benchmark rate, potentially holding up a company’s complete transition before June 2023.

Research findings include:

Top-tier U.S. banks made considerable progress with LIBOR reform—14 of the 15 top-tier banks disclosed their introduction of alternative reference rates in certain newly-issued cash and derivative products.
Mid-tier U.S. banks also made progress with their LIBOR reform disclosures but trailed the efforts of larger banks.
U.S. corporates disclosures remained the same as those of 2020. Nonetheless, each corporate enhanced their disclosures in accordance with SEC principles.