Euribor-EBF, the Brussels-based industry group that runs Euribor interest-rate benchmarks, said it will wind down its USD Euribor index after less than two years as banks withdraw contributions to the product.
The index, a gauge of banks’ estimated cost of borrowing in dollars that was introduced in April 2012, will end on Sept. 1, the group said in a statement on its website. The USD Euribor panel’s membership has shrunk to 10 banks from the 20 it had when it was introduced to compete with dollar Libor. (US0003M) Commerzbank AG (CBK) and Natixis (KN) were the latest lenders to depart the panel, quitting last month.
Firms are withdrawing from interest-rate benchmarks amid concern they could face penalties if they are found to have engaged in wrongdoing. Royal Bank of Scotland Group Plc, UBS AG and Barclays Plc (BARC) have been fined more than $2.5 billion for rigging the London interbank offered rate and Euribor. New European Union rules will include the power to force banks to make submissions to Euribor, a gauge of banks’ estimated cost of borrowing in euros over different periods of time.
“The current environment and ongoing regulatory reform doesn’t make contributing a simple thing,” Euribor-EBF Director Cedric Quemener said by phone. “We are sad to lose USD Euribor, but we understand the banks’ positions.”
The discontinuation of the panel “should have no impact on legacy or prospective contracts given the limited level of diffusion of this index,” the group said in the statement.
The 10 members of the USD Euribor panel are Banco Bilbao Vizcaya Argentaria SA (BBVA), Banco Santander SA (SAN), Bank of China Ltd. (3988), CaixaBank (CABK), Caixa Geral de Depositos, Cecabank SA, CITIC Bank International, Erste Group Bank AG (EBS), KBC Groep NV (KBC) and Turkiye Garanti Bankasi AS. (GARAN)