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The Independent Community Bankers of America (ICBA) said a new fee schedule released by the Intercontinental Exchange (ICE) will waive or sharply reduce fees for 99 percent of community banks that use or reference the London Interbank Offered Rate index (LIBOR). LIBOR is used as the floating rate for many financial contracts, from interest rate swaps to student loans, mortgages and corporate funding instruments, and is the basis for hundreds of trillions of dollars’ worth of interest rate exposure.
ICE previously announced that any financial institution using or referencing the Libor index for financial products or investments would be subject to a $16,000 annual fee, which would have hindered community banks from making loans in their local communities. ICBA communicated its concerns with ICE on several occasions, noting the damaging impact such high fees would impose on community banks, their customers and their communities. The exchange announced today that it will waive the fee for the vast majority of community banks.
“ICBA appreciates that ICE accommodated nearly all community banks, which aren’t major users of the Libor index and shouldn’t have to pay such a large fee for their limited usage,” ICBA President and CEO Camden R. Fine said. “While ICBA would have liked all community banks to be exempt from this new fee, we appreciate that the fee will be waived for the vast majority of community banks and sharply reduced for most others. This waiver will mitigate the negative effects of the new fees on local customers and communities.”
The new LIBOR fee schedule will waive the $16,000 annual fee for all community banks under $1.5 billion in assets. Banks between $1.5 billion and $10 billion in assets would pay a $2,000 annual fee if they use products that reference LIBOR, a $14,000 reduction from the original proposal.
Upon first hearing of the fee in July, ICBA sent a letter to ICE outlining community bank concerns and subsequently held several meetings with ICE representatives to discuss the disproportionate impact of the fee on U.S. community banks. ICBA’s letter requested a complete exemption for banks under $50 billion from the annual fees.