Regulatory Alerts2021-12-09
Central Bank of Kenya Guidance on LIBOR Transition
The Central Bank of Kenya (CBK) requires banks in the country to transition away from the London Interbank Offered Rate (LIBOR) and adopt alternative risk-free rates (RFRs). This requirement is due to the scheduled cessation of LIBOR by the end of December 2021, as well as the potential lack of representativeness of USD LIBOR settings ending at the end of June 2023. The CBK has provided comprehensive guidance on various aspects of the transition process, including governance, monitoring, risks and mitigations, systems changes, testing, and preparedness, as well as timelines for completion. Additionally, banks are required to report regularly on their progress towards transitioning to alternative RFRs identified by national working groups as follows: 1. Total value and number of financial products priced on LIBOR (classified as one-month, three-month, and over three-month tenors). 2. Status towards transitioning to alternative reference rates. 3. Measures put in place to mitigate risks associated with transitioning to alternative reference rates."