OCC issues updated LIBOR self-assessment tool
On October 18, the OCC released an updated self-assessment tool for banks to evaluate their preparedness for the LIBOR cessation at the end of the year. The updated guidance reminds banks that they should cease entering into new contracts using LIBOR as a reference rate as soon as practicable but no later than December 31, 2021. The self-assessment tool may be used by banks to identify and mitigate a bank’s LIBOR transition risks, and management should use the tool to evaluate whether preparations for the transition are sufficient. The OCC notes that “LIBOR exposure and risk assessments and cessation preparedness plans should be complete or near completion with appropriate management oversight and reporting in place,” and “most banks should be working toward resolving replacement rate issues while communicating with affected customers and third parties, as applicable.” The OCC also reminds banks to tailor risk management processes to the size and complexity of a bank’s LIBOR exposures and “consider all applicable risks (e.g., operational, compliance, strategic, and reputation) when scoping and completing LIBOR cessation preparedness assessments.”
Bulletin 2021-46 rescinds Bulletin 2021-7 published in February (covered by InfoBytes here).