Information about benchmarks

For several years now, financial markets have been taking steps to regulate interest rate benchmarks (such as WIBID, WIBOR, EURIBOR and LIBOR). In the European Union, those measures are taken in line with Regulation (EU) 2016/1011 of the European Parliament and of the Council (“Benchmark Regulation”, “BMR”). The purpose is to increase reliability and security, and to improve benchmark provision methods.

As a result of the steps taken, the calculation methods of selected benchmarks (such as WIBID, WIBOR and EURIBOR) have been changed to meet the BMR requirements. Some benchmarks are being gradually discontinued and replaced by others (for example, LIBOR has been replaced by SOFR). That is why banks have developed plans in case of cessation of benchmarks or material change of their calculation methods. As part of those plans, fallback clauses have been included in agreements with customers.

WIBID and WIBOR are the key interest rate benchmarks in the Polish financial market. They are provided in line with the method developed by GPW Benchmark S.A. On 16 December 2020, the Polish Financial Supervision Authority (KNF) authorised that company to act as the benchmark administrator.

The bank continuously monitors regulatory and legislative measures taken by domestic, foreign and international authorities with respect to benchmarks. It also takes steps to ensure compliance with the BMR requirements.

In July 2022, the National Working Group for benchmark reform (NWG) started its operations. It was established in connection with the planned introduction of an alternative interest rate benchmark in Poland to be calculated on the basis of overnight deposit transactions. The NWG also published the reform roadmap and recommendations concerning the application of WIRON in new sales of products offered by financial institutions. 

Why will WIRON replace WIBOR?
The Polish financial market increasingly more resembles other European and global financial markets. It is also the case of benchmarks that are commonly applied by market participants. They are used by banks to set interest rates of loans and deposits, among other things. WIRON is an index that is based entirely on overnight transactions in financial markets. The benchmark reform in Poland follows the global trend of replacing IBORs with risk-free rates such as WIRON.

When will the change be introduced for existing agreements?
The change process will not start until the administrator or the KNF officially announces its intention to cease WIBOR.

Will the change affect all WIBOR-based agreements?
Yes, the change will affect all agreements with WIBOR as a reference rate, including credit facility agreements, lease agreements, factoring agreements, financial instruments (e.g. IRS, interest rate caps and floors), etc.

Do I need to do anything in relation to the change?
No, you do not need to take any action now. If the situation changes, we will inform you in due course.

Will WIRON-based products be cheaper?
It is not possible to answer this question because the two benchmarks are different. WIBOR is based on term deposits whereas WIRON is based on overnight deposits. 1M WIBOR refers to a transaction that begins in two days and ends one month later. 1M Compounded WIRON is an average compounded rate of overnight deposits for the previous month. We do not know how the values of those indices will change in the future.
According to the BMR, an interest rate cut is not a reason for changing the benchmark. Both the BMR and Polish legislation provide for a possibility to use a spread adjustment in relation to the benchmark replacing WIBOR to ensure that the economic impact of the change is as neutral as possible. The adjustment (if any) will be indicated in the Finance Minister’s Regulation or determined on the basis of fallback clauses included in agreements.