Eastern Bank Limited (EBL) has taken SOFR-based trade loan recently from Wells Fargo Bank. This is the first SOFR-based transaction in Bangladesh market for the lender.
As that the publication of most tenors of the London Interbank Offered Rate (LIBOR) is expected to cease by the end of 2021, financial market participants across the globe are now gradually moving to risk-free interest rates. The Secured Overnight Financing Rate (SOFR) is a broad measure of the cost of borrowing cash overnight collateralized by Treasury securities. SOFR is calculated as a volume-weighted median of transaction-level tri-party repo data, GCF Repo transaction data, and data on bilateral Treasury repo transactions. SOFR is calculated differently from LIBOR and does not have a credit risk component.
Under the deal, Wells Fargo, SG has extended a trade loan facility for 180 days to EBL where SOFR has been taken as the USD benchmark rate instead of LIBOR.
Deputy Managing Director and Head of Treasury, FI & Offshore banking of EBL Mehdi Zaman said, “The transition from LIBOR to risk-free benchmark rates is a recent development in the financial market across the globe and we are happy to partner with Wells Fargo in our first step into the new era of Alternative Reference Rates. This deal will help us prepare for this crucial LIBOR transition and future business endeavors.”
Managing Director & Head CIB –FIG, APAC South, Wells Fargo Bank Santanu Sengupta said, “As the global financial markets transition from LIBOR to Alternative Reference Rates, we are delighted to partner with Eastern 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 partners to prepare for the LIBOR transition.”
EBL is the most awarded private commercial bank in Bangladesh and first to be rated by International Rating Agency Moody’s. A leader in corporate and retail banking, EBL is in the forefront of digital innovations such as App based banking, augmented reality and chatbot based banking services. As a market leader in corporate banking, the lender has the capacity to finance from large-scale infrastructure and manufacturing projects to complex trade transactions. The bank is acclaimed for our one-stop service for local and foreign investors for our great compliance culture, strong relationship with regulators, development financial institutions and large network of global banks. The private commercial bank has its presence through its subsidiary in Hong Kong, and representative offices in Myanmar and Guangzhou. The lender has plans to extend our banking wings in India.
Wells Fargo & Company (NYSE: WFC) is a leading financial services company that has approximately $1.9 trillion in assets, proudly serves one in three U.S. households and more than 10% of small businesses in the U.S., and is the leading middle market banking provider in the U.S. We provide a diversified set of banking, investment and mortgage products and services, as well as consumer and commercial finance, through our four reportable operating segments: Consumer Banking and Lending, Commercial Banking, Corporate and Investment Banking, and Wealth & Investment Management. Wells Fargo ranked No. 37 on Fortune’s 2021 rankings of America’s largest corporations. In the communities we serve, the company focuses its social impact on building a sustainable, inclusive future for all by supporting housing affordability, small business growth, financial health, and a low-carbon economy.
