The SIBOR rate is one of the most widely followed interest rate benchmark in Singapore due to the fact that practically all mortgage loans are priced off it.

A small move up or down in the SIBOR rate has the potential to impact not just a few hundreds of millions of Singapore dollar denominated loans but a few billion.

Here’s a quick primer on the calculation methodology for those who are interested in knowing how the SIBOR is really set, and I’m sure the Monetary Authority of Singapore (MAS) keeps tabs on the banks to make sure none of them rig the process.

The information is taken from ABS’ website.

First let’s identify the key players

  1. Contributor Banks. These are the banks that decide to borrow money from other banks …