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Tuesday, November 30, 1999

BUSINESS

HSBC, Standard break upgrade deadlines

BLOOMBERG

HSBC Holdings and Standard Chartered, two of the biggest banks in Hong Kong, replaced or upgraded computer systems more than a month after the deadline imposed by regulators concerned about Y2K readiness.

HSBC, which holds deposits for almost half the city's population, replaced its only mainframe computer in October.

Last week, Standard Chartered said it had suspended service at all automated-teller machines for 8.5 hours while it carried out an upgrade.

Both moves involved the type of changes the Hong Kong Monetary Authority wanted done by September.

"They are supposed to have a systems freeze," said Louis Ho, a partner who handles computer-risk management at Arthur Andersen in Hong Kong. "People spent a few years working on this issue. I don't see any reason why at the last minute they have to make all these changes."

HSBC said the latest adjustment was not to install computers equipped to avoid confusion with 2000 being read as 1900 - that was fixed long ago - but to avoid potential volume problems such as account holders checking their balance in the early hours of January 1.

"We are confident that the new machine will have enough capacity for the new year and our new Internet businesses," HSBC head of information technology Y. B. Yeung said.

The bank installed a bigger Hitachi Data Systems mainframe in October, keeping the old one for back-up.

Standard Chartered said it was spending "g180 million (about HK$2.24 billion) worldwide on its year-2000 programme.

The HKMA declined to comment on the banks' actions but said it was confident Hong Kong banks were ready for new year.

A risk manager said last-minute computer upgrades in Hong Kong's financial industry were not widespread.

Even so, people usually underestimated the time needed to upgrade or replace a system, or replace it with a new one, he said.

"If the HKMA accepted this, it must be something critical to their operation.

"It may not be related to Y2K issues, but rather their business requirements."

HSBC, Europe's biggest bank by market value, in August said it spent US$30 million during the six months to June 30 making Y2K computer preparations, and expected to spend an additional $24 million on testing and further changes.

These costs did not include "major systems changes not directly related to the year 2000, but which address some year 2000 issues", HSBC said in its Y2K readiness disclosure statement.

Standard Chartered said it was not taking the Y2K-situation lightly.

"The year-2000 programme is the biggest project Standard Chartered has ever undertake

-- Homer Beanfang (Bats@inbellfry.com), November 30, 1999