[SINGAPORE] A dozen banks are left on the panel which helps determine Sibor - a shrunken number as banks stop contributing quotes - but the Association of Banks in Singapore (ABS) said yesterday that it is comfortable with the situation.
This comes a day after the Monetary Authority of Singapore (MAS) said it is looking into the setting of key interest rate benchmarks by banks.
"We hope there will be more volunteers," said ABS director Ong-Ang Ai Boon. Under ABS market fixings governance and procedures, there have to be at least 12 banks providing Sibor (Singapore interbank offered rate) submissions.
Nevertheless, she is confident that enough banks will be left on the panel. "I believe that the banks will contribute, that in Singapore, we will have the 12 to quote the Sibor," she said.
The Sibor is a key benchmark rate here and is widely used for pricing mortgages and other types of loans. ABS oversees the setting of the rate, which is derived from a daily poll of banks.
Banks provide Sibor quotes voluntarily. There were as many as 17 banks on the panel when ABS spoke to BT in February. But that number dropped to 15 about two weeks ago and is now down to 12, as banks such as Royal Bank of Scotland exit the panel.
The general procedure for calculating the Sibor has not changed, Mrs Ong said. Each day, banks submit rates at which they think they can borrow from other banks. Thomson Reuters, on behalf of ABS, then ranks the submissions and trims off the top and bottom 25 per cent. It averages the remaining quotes to produce the Sibor.
Back in February when there were 17 banks on the panel, the average had to come from at least eight quotes. If there were less than eight remaining after the trimming process, ABS would approach money brokers for quotes to make up for the shortfall.
ABS confirmed that with 12 banks now, the average of just six quotes would be taken. Mrs Ong said that ABS checks Sibor submissions before they are posted and so far, the remaining quotes tend to be similar, with no major variations that would distort the average readings.
"We have not seen any skewing of the mean by any of the rates," she said.