12/02/2021  "Pushing Ahead with SOR-SORA Transition in 2021" - Keynote Speech by Mr Leong Sing Chiong, Deputy Managing Director (Markets …  Speeches  Published Date: 02 February 2021  "Pushing Ahead with SOR-SORA Transition in 2021" - Keynote Speech by Mr Leong Sing Chiong, Deputy Managing Director (Markets & Development), Monetary Authority of Singapore, at ASIFMA Virtual Event: Singapore IBOR Transition on 2 February 2021 1 Good morning everyone. First, let me take this opportunity to wish everyone a Happy New Year! Let me also thank the Asia Securities Industry & Financial Markets Association (ASIFMA) and the Association of Banks in Singapore (ABS) for organising this webinar and inviting me to speak on the important issue of Singapore’s interest rate benchmark transition. 2 In the next 20 mins or so, I will do a brief recap of the key objectives and milestones that we had set out last year. I will then touch on some recent developments in the US and UK that have a bearing on our transition timelines, and I will finally outline what our priorities are for this year in the transition to Singapore Overnight Rate Average (SORA). Recap 3 Back in 2019, the financial industry in Singapore, represented by the ABS and the Singapore Foreign Exchange Market Committee (SFEMC) [1] , assessed that given the eventual discontinuation of USD London Interbank Oﬀered Rate (LIBOR) and SGD Swap Oﬀer Rate (SOR), the most sustainable and sensible path was to transition aﬀected SOR markets to SORA.
Therefore, the free funds were invested in non-resident assets against a background of lower return on investment in the global market. The deteriorated loan quality, the obligation to increase the reserve funds and the lower average rate of return were followed by the decline in the banking sector net profit. BIS Review 174/2010  1  For some banks, this situation needs careful monitoring by the governing structures and shareholders in order to identify those operations that would improve the expenditure and income structure and maintain its capitalization levels. With regard to lending, the Bank of Albania has continuously called for greater banking sector commitment in this regard. This has not been a rhetorical-like request considering that we have taken all the necessary actions to meet the banking sector needs with ample liquidity and we have cut the key interest rate several times. These measures, coupled with lower Government borrowing, have provided room for lower interest rates on ALL lending. Nonetheless, their decrease still seems insufficient to push credit demand higher. Loan quality remains a challenge both for ALL and foreign currency-denominated loans. Against this setting, it is essential that banks do not only create in a prompt and rigorous fashion reserve funds according to the regulatory requirements, but they should also complete and improve the procedures and human and financial capacities that enable following-up insolvent borrowers. Complete acknowledgement of loan quality-related concerns and the full commitment of governing structures and shareholders allow for its more rapid and ultimate handling.