Notification of termination of the activities related to calculating and publishing SOFIBOR and resultant changes for business clients
27 June 2018
We would like to inform you that, as required by Regulation (EC) 2016/1011 of the European Parliament and of the Council, as of 01.07.2018 BNB will discontinue the activities related to the calculation and publication of the SOFIBOR index.
In this respect and in compliance with the adopted amendments to the Law on Credit Institutions, United Bulgarian Bank has adopted "UBB Contingency Plan for a substantial change or cancellation of a benchmark", which applies directly in case any of the benchmarks used so far to calculate a floating or reference interest rate under credit agreements (such as Sofibor / Euribor / Libor, etc.) is abolished or substantially changed.
As of 01.07.2018, under all new credit agreements in BGN with floating interest rate for business customers, including overdrafts, credit lines with floating interest rates, UBB will apply an annual interest rate determined on reference interest rate (RIR) of United Bulgarian Bank plus fixed margin.
For credit agreements for business clients in BGN (including overdrafts, credit lines and bank guarantees) concluded before 01.07.2018, for which the total amount of the interest rate is determined on a one-month / three-month / six-month / nine month/ 1 year SOFIBOR plus a flat-rate fixed margin, the bank will fix the floating interest rate component to the last applied value under the credit agreements for a transitional period of three months (until 30.09.2018 inclusive). Within this transition period, the aggregate amount of the interest will be kept as an absolute amount according to the last value accepted by the bank for SOFIBOR prior the date of the official discontinuation of its preparation and maintenance applicable to the respective contract, but not less than the amount of the flat-rate fixed margin or the minimal threshold for the interest rate described in the contract.
Upon expiration of this transition period, as of 1st October 2018 in reference to the application of the „UBB Contingency Plan for a substantial change or cancellation of a benchmark“, the Bank will apply directly to all credit agreements to business customers, including overdrafts, credit lines and bank guarantees, UBB Reference Interest Rate (RIR) per BGN + the agreed fixed margin. All other clauses and conditions stipulated in the contract remain valid.
More detailed information about the methodology and the formula for calculating the Reference Interest Rate for UBB can be found here.
In the case of any changes to the credit agreements, in relation to the above, customers will be notified in the manner provided by the applicable law and the particular contract.