United States: OCC Expands FFIEC Statement, Provides Guidance To Banks On Managing LIBOR Transition

In OCC Bulletin 2020-68, dated July 1, 2020, the Office of the Comptroller of the Currency (OCC) expands on the contemporaneous FFIEC Statement on Managing the LIBOR Transition¹ by providing additional guidance on identifying applicable risks related to, planning for, and successfully transitioning to replacement rates.

Interestingly, the OCC Bulletin states that "[t]he OCC does not endorse a specific Libor replacement rate" and adds a "Risk Management" section that includes important new guidance for regulated banks. The bulletin also includes other sections-"Fallback Language," "Choice of Replacement Rate," "Assessing and Controlling Risk to Earnings Related to Libor Transition" and "Implications for Asset Liability Management or Hedged Products"-that provide more detail (and presumably areas for supervisory examination and diligence) regarding recommended actions for banks to properly manage the LIBOR transition.

Footnote

1 Discussed in our related Perspective "US FFIEC Issues Joint Statement on Managing the LIBOR Transition" available at: https://www.mayerbrown.com/en/perspectives-events/publications/2020/07/us-ffiec-issues-joint-statement-on-managing-the-libor-transition. 

Originally published 6 July 2020.

Visit us at mayerbrown.com

Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe - Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

© Copyright 2020. The Mayer Brown Practices. All rights reserved.

This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.