ZARONIA Nedbank JIBAR benchmark reform

South Africa’s interest rate benchmark reform represents a major transition from legacy reference rates—most notably JIBAR—towards more transparent, robust, and globally aligned risk‑free rates such as the South African Overnight Index Average (ZARONIA). This page exists to help Nedbank clients, businesses and other stakeholders understand the changes, why they are happening, and what they mean for financial contracts, risk management, and day‑to‑day operations. By providing clear guidance, updates, and practical resources, this hub aims to support a smooth and informed transition across the South African financial system.

What is South African interest benchmark reform?

South Africa is currently undergoing one of the most significant financial benchmark transitions in its history as the market moves away from the previous Johannesburg Interbank Average Rate (JIBAR) toward the newer South African Rand Overnight Index Average (ZARONIA). The reform is driven by the South African Reserve Bank (SARB) and the Market Practitioners Group (MPG) to strengthen the credibility, transparency, and robustness of local interest rate benchmarks, in line with international best practice. ZARONIA is a risk‑free rate based on actual overnight unsecured lending transactions between South African banks—making it more representative and less vulnerable to judgement‑based submissions than JIBAR.

For clients of Nedbank, this transition affects a wide range of products—loans, bonds, derivatives, and other contracts that currently reference JIBAR. New contracts will increasingly reference ZARONIA, and existing contracts will need to adopt appropriate fallback language or be actively transitioned. Banks are supporting clients through this shift by updating systems, offering tools, and providing guidance on how pricing, risk management, and documentation will change under the new benchmark. The reform also creates opportunities in a more transparent rate environment, but clients should expect operational, valuation, and accounting adjustments as markets migrate to the new standard. 

Several key milestones remain as South Africa completes its transition. The SARB has confirmed that JIBAR will cease permanently after its final publication on 31 December 2026, after which all tenors will be considered non‑representative. A major interim deadline is 31 April 2026, the “No New JIBAR” date, after which no new JIBAR‑linked contracts may be issued. Active transition of legacy contracts intensifies through 2026, supported by formal fallback mechanisms, ZARONIA‑first initiatives, and market infrastructure readiness. Clients are encouraged to work closely with their bankers to ensure contracts, systems, and pricing models are updated well ahead of JIBAR’s cessation.

The new benchmark on the block - ZARONIA

South Africa’s financial markets are entering a new era with the introduction of the South African Rand Overnight Index Average—better known as ZARONIA. Developed under the guidance of the South African Reserve Bank (SARB) and the Market Practitioners Group (MPG), ZARONIA forms part of a global shift away from judgment‑based interbank benchmarks toward transparent, transaction‑driven reference rates. Its emergence follows years of benchmark reform, echoing international moves that replaced LIBOR in major markets. ZARONIA is now positioned as the country’s new risk‑free benchmark rate, intended to bring robustness and credibility to how South Africa prices financial products, manages risk, and ensures market integrity.

At its core, ZARONIA reflects the volume‑weighted, trimmed‑mean interest rate of actual overnight unsecured lending transactions between South African banks—a critical distinction from the outgoing JIBAR benchmark. Because ZARONIA is transaction‑based and published daily by the SARB, it closely mirrors real funding conditions in the money market. Its methodology incorporates only eligible trades, removes outliers to improve accuracy, and produces a reliable metric for overnight borrowing costs. This construction makes ZARONIA inherently more transparent and less susceptible to manipulation compared with older benchmarks that relied on panel‑bank submissions.

ZARONIA is replacing the long‑standing Johannesburg Interbank Average Rate (JIBAR)—a benchmark whose relevance has diminished due to a shrinking underlying lending market and a reliance on indicative quotes rather than observable transactions. JIBAR will cease publication entirely after 31 December 2026, with a key milestone being the “No New JIBAR” date of 31 April 2026, after which no new JIBAR‑linked products may be issued. As the transition progresses, financial institutions and clients will experience changes in interest calculations, product pricing, fallback language, and risk‑management practices. While the shift is significant, it ultimately aligns South Africa with global best practices and provides markets with a more stable, modern, and trustworthy reference rate—ushering in a future where ZARONIA becomes the new foundation for rand‑denominated financial contracts. 

What the remediation of legacy transactions entails

Benchmark remediation is the process of updating financial contracts that reference the outgoing JIBAR benchmark, which will cease after its final publication on 31 December 2026. As JIBAR’s underlying market has become too thin to support a robust benchmark, South Africa—following global best practice—is transitioning to ZARONIA, a transparent, transaction‑based overnight rate. Without remediation, many existing contracts would become unworkable once JIBAR stops, creating legal and operational uncertainty for both banks and clients.

For Nedbank and its clients, remediation involves identifying all JIBAR‑linked instruments, assessing their fallback language, and incorporating new terms that reference ZARONIA. This includes inserting replacement‑rate mechanics, credit adjustment spreads, and updated interest calculation conventions. The process spans systems upgrades, risk‑model adjustments, documentation changes, and coordinated communication with clients to explain how the transition impacts pricing, accruals, and contract functionality.

Clients will need to engage with Nedbank when the bank reaches out to them to amend loan agreements, bond documentation, and derivative contracts, either through bilateral amendments or adherence to industry protocols such as the ISDA fallback framework. With a “No New JIBAR” date set for 31 April 2026, the transition period is limited. Active cooperation between banks and their clients will ensure that legacy deals migrate smoothly to ZARONIA, preserving economic equivalence and maintaining the integrity of financial contracts after JIBAR’s discontinuation.

What the remediation of legacy transactions entails

Benchmark remediation is the process of updating financial contracts that reference the outgoing JIBAR benchmark, which will cease after its final publication on 31 December 2026. As JIBAR’s underlying market has become too thin to support a robust benchmark, South Africa—following global best practice—is transitioning to ZARONIA, a transparent, transaction‑based overnight rate. Without remediation, many existing contracts would become unworkable once JIBAR stops, creating legal and operational uncertainty for both banks and clients.

For Nedbank and its clients, remediation involves identifying all JIBAR‑linked instruments, assessing their fallback language, and incorporating new terms that reference ZARONIA. This includes inserting replacement‑rate mechanics, credit adjustment spreads, and updated interest calculation conventions. The process spans systems upgrades, risk‑model adjustments, documentation changes, and coordinated communication with clients to explain how the transition impacts pricing, accruals, and contract functionality.

Clients will need to engage with Nedbank when the bank reaches out to them to amend loan agreements, bond documentation, and derivative contracts, either through bilateral amendments or adherence to industry protocols such as the ISDA fallback framework. With a “No New JIBAR” date set for 31 April 2026, the transition period is limited. Active cooperation between banks and their clients will ensure that legacy deals migrate smoothly to ZARONIA, preserving economic equivalence and maintaining the integrity of financial contracts after JIBAR’s discontinuation.

What Nedbank is doing in relation to benchmark reform?

Nedbank is actively supporting South Africa’s transition away from the Johannesburg Interbank Average Rate (JIBAR) as part of the country’s broader financial benchmark reform. The bank notes that any client with transactions referencing JIBAR—such as deposits, loans, facilities, or derivatives—is affected by the reform and the bank intends to engage them during 2026.

Given that the South African Reserve Bank Prudential Authority (SARB PA) has now set the official JIBAR cessation date on 31 December 2026, Nedbank is embarking on a comprehensive client engagement and awareness drive to proceed the contractual remediation process required to orderly transition the bank and its clients to the new ZARONIA benchmark rate. This is expected to proceed over the course of 2026 and into the first quarter of 2027 for select products.

To facilitate a smooth transition, Nedbank through its dedicated internal benchmark reform programme will provide education, FAQs, and product‑specific guidance to help clients understand how interest calculations, fallback language, and contract terms will change under ZARONIA. A range of content will be made freely available to Nedbank clients and the wider financial market on the bank’s dedicated website as well. Lastly it will also ensure the process of transition and remediation of legacy transactions is conducted in fair and transparent manner to all clients and impacted parties.  

Nedbank encourages clients to reach out to their respective bank contact points should they have any queries in the interim regarding benchmark reform and how it will impact them. Alternatively, it encourages clients to reach out to the bank at nedbankjibarreform@nedbank.co.za should they have any enquiries in the meantime.