"What's your plan for moving banks off Libor?"
It's a question we've been getting quite a bit recently during sales conversations with banks. And it's understandable. From their perspective, moving off Libor to another pricing index, like SOFR, for example, is a very significant step. To do it, you need a plan.
We know there's a lot to think about in terms of this switch, and we've detailed the important questions you need to answer in this post.
But when it comes to the mechanics of switching off Libor, you don't need an elaborate plan if you're already a PrecisionLender client. You just need a mouse.
That's because we've already built in the SOFR index into our platform. If you want to make the switch, here's what that entails.
Making the Switch
First, just click on the administration button on the lower left of the home screen. Then select "Products" from the left-side menu. Select a product - say Commercial Real Estate, Owner Occupied - then click on the "Edit" button on the top left corner of the screen.
Now you're ready to move off Libor.
Step 1 - Scroll down to the Index Families.
Step 2 - Click to uncheck the box next to Libor.
Step 3 - Click to check the box next to SOFR.
That's it. Seriously.
Not interested in using the SOFR index? There are several other options, which you can learn more about here, including creating a Custom Funding Index.
We've also handled assumption versioning for you. Every deal your bank priced before the switch can still use whatever was index was in place at the time. We can flag these opportunities to make it easier for you to keep track. Meanwhile, every deal going forward will only be able to use SOFR, making it easy to enforce an official changeover date.
Repeat that for each product and voila! You've executed your post-Libor plan!
It really is that simple in PrecisionLender.
About the AuthorFollow on Linkedin More Content by Jim Young