Swedish Bankers’ Association to Take Over Setting Stibor

The Swedish Bankers’ Association will in March take over the responsibility of setting the Stockholm interbank offered rate after the central bank in November urged greater transparency.

“The Swedish Bankers’ Association and the banks that set Stibor have together developed a framework for Stibor,” the group said today in a statement on its website. “This framework establishes a clearer structure for governance and control as well as transparency regarding price-setting. It also contains rules for how Stibor banks shall be appointed.”

The Swedish central bank reviewed how the rate had been set after companies issuing debt based on Stibor said the benchmark was based on quotes from too few banks. After completing its review, the Riksbank in November recommended that participating banks be obliged to lend and borrow at the rate they quote and that policy makers be given “full insight,” and proposed reducing the number of maturities.

The association said that the number of Stibor maturities will be cut to six from eight, given for tomorrow, one week, one month, two months, three months and six months. The group will establish a Stibor Committee, which will be responsible for monitoring the framework.

Stibor, the rate at which banks say they can borrow from each other, is used as a reference for loans and financial contracts of as much as 50 trillion kronor ($7.7 trillion), including mortgages and corporate loans with variable interest rates and derivatives. Danske Bank A/S, Nordea Bank AB, Swedbank AB, Svenska Handelsbanken AB and SEB AB currently set the rate.

Sweden’s Stibor probe follows the scandal surrounding the London interbank offered rate, which saw Barclays Plc being fined a record $463 million in June for manipulating Libor.

The Riksbank concluded in November last year that “there’s nothing to indicate that the benchmark rate Stibor has been manipulated,” though the central bank said it “identified a number of shortcomings in the framework.”

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