Prime Bank has successfully completed its first transaction in Secured Overnight Financing Rate (SOFR). This is a pioneering step for Prime Bank to adopt SOFR as the new global alternative benchmark rate, as London Interbank Offered Rate (LIBOR) will cease to exist after June 2023, said a statement.
LIBOR has been the most reliable benchmark in the world for setting interest rates on the international interbank market for short-term loans. However, SOFR provides a more accurate reflection of lenders' USD funding costs and supports a large volume of transactions and financial products. Transitioning away from LIBOR linked borrowing, Prime Bank made a trial SOFR-linked transaction on 25th August 2021 with Wells Fargo Bank, New York.
Commenting on this transaction, Prime Bank's Managing Director and CEO Hassan O. Rashid said "We are pleased to execute a successful debut SOFR-linked transaction. This is a right step to prepare for the post-LIBOR landscape and we are very grateful to our correspondent bank and regulator for their cooperation and guidance. As a leader in international trade, this transition will help us serve our corporate customers better in trade and loan products in USD."
Mr. Santanu Sengupta, MD & Head - CIB FIG APAC South, Wells Fargo Bank N.A. said, "Bangladesh is an important market for us and we have long-standing relationships with some of the leading Financial Institutions in the country. As the global financial markets transition from LIBOR to Alternative Reference Rates, we are delighted to partner with Prime Bank on their first SOFR benchmarked loan. Wells Fargo has played a leading role in this important industry initiative and we continue to work with our customers to prepare for the LIBOR transition."
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