ZURICH, May 11 (Reuters) - UBS Group on Monday launched floating-rate mortgage loans tied to the new Swiss money market reference rate SARON, phasing out loans linked to the standard LIBOR rate that is being abandoned next year after manipulation scandals.
More products based on the Swiss Average Rate Overnight (SARON) will follow this year and next, Switzerland's biggest bank said in a statement. It is no longer offering Swiss mortgages based on the London Interbank Offered Rate (LIBOR).
In 2017, about 6 trillion Swiss francs ($6.17 trillion) of contracts used LIBOR as a benchmark, making it by far the most important interest rate for the Swiss economy. But officials have been urging banks to make the switch.
Unlike LIBOR, SARON is not calculated from contributions by individual banks but based on actual market prices determined via a platform on the Swiss stock exchange serving banks and insurers. The aim is to make it tamper-proof.
It marks a change from the past because the rate is determined only at the end of the reference period.
$1 = 0.9720 Swiss francs Reporting by Michael Shields, editing by John Revill