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Technology News

Thu, 25 Nov 1999, 11:18pm EST

HSBC, Standard Chartered Miss H.K. Y2K Computer Upgrade Deadline by Month

By Jason Singer and Leah Harrison

HSBC, Standard Chartered Make Change After Y2K Freeze (Update1)

(Adds that HSBC's new computer cost about $9.6 million.)

Hong Kong, Nov. 26 (Bloomberg) -- HSBC Holdings Plc and Standard Chartered Plc, two of the biggest banks in Hong Kong, replaced or upgraded computer systems more than a month after a 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. This week, Standard Chartered said it suspended service at all automated teller machines for eight-and-a-half hours while it carried out a computer upgrade.

Both moves involved the type of changes the Hong Kong Monetary Authority -- the agency charged with ensuring the world's fifth-biggest banking center is ready for the new millennium -- wanted done by the end of September.

``They are supposed to have a systems freeze,'' said Louis Ho, a partner who handles computer risk management at Arthur Andersen & Co. 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.''

In HSBC's case, the latest adjustment wasn't to install computers equipped to avoid confusion with 2000 being read as 1900. That was fixed long ago. These changes are to avoid the latest threat associated with the new year: volume.

``I don't think anybody has a good reading on the volume to be expected yet,'' said Y.B. Yeung, HSBC's head of information technology, referring to such potential problems such as account holders using ATM cards to check their balance in the early hours of January 1.

Increased Capacity

``We are confident that the new machine will have enough capacity for the new year and our new Internet businesses,'' Yeung said. The bank installed a bigger Hitachi Data Systems Inc. mainframe in October, and still has the old one for backup, he said. A top-of-the-range mainframe costs about 1 billion yen ($9.8 million), Hitachi said. The change required ATM machines to be taken offline for about three hours.

Yeung said the bank's upgrade didn't break the ``spirit'' of HKMA's May ``Guidance Note'' on Y2K preparations, which says banks should ``put tested/compliant systems into production use by end-June if possible and certainly not later than end- September.''

He also said the HKMA was informed and approved the move. Standard Chartered officials couldn't be reached for comment.

The HKMA declined to comment on the banks' actions -- which HSBC and Standard Chartered called ``routine upgrades'' -- but said it's confident Hong Kong banks are ready for new year.

Arthur Andersen's Lo said last-minute computer upgrades in Hong Kong's financial industry aren't widespread. Even so, ``people usually underestimate the time needed to upgrade a system or replace it with a new one,'' he said.

Critical Operations

``If the HKMA accepted this, it must be something critical to their operation,'' Lo said. ``It may not be related to Y2K issues, but rather their business requirements.''

London-based HSBC, Europe's biggest bank by market value, said in August it had spent $30 million during the six months ending June 30 making Y2K computer preparations, and that it expected at the time to spend an addition $24 million on testing and making further changes.

Those costs don't include ``major systems changes that are not directly related to the Year 2000 but which address some Year 2000 issues,'' HSBC said in its Y2K readiness disclosure statement. Yeung would only say the upgraded mainframe was an item already budgeted.

Standard Chartered said it plans to spend 180 million pounds ($111 million) on ``the whole Year 2000 Program, stretching beyond 2000.''

And the London-based bank said it isn't taking the plan lightly: ``The Year 2000 Program is the biggest project Standard Chartered has ever undertaken.''

-- Uncle Bob (UNCLB0B@Tminus35&counting.down), November 25, 1999

Answers

-- Steve (hartsman@ticon.net), November 25, 1999.

Is this what you meant Steve? Link

Saying it wasn't Y2k-related seems rather dubious. Nice also that they didn't violate the "spirit" of a code freeze. Think that'll hold up in court?

====

-- Linda (lwmb@psln.com), November 26, 1999.

Thanks. I forgot to close off the quote.

-- Steve (hartsman@ticon.net), November 26, 1999.