Argentina's biggest bank faces Y2K challenge

9:54 a.m. ET (1355 GMT) August 17, 1998

 

 

BUENOS AIRES — Argentina's largest bank, state-owned Banco Nacion, faces a "real challenge'' to fix the millennium bug but should manage to stop its computers going haywire in 2000, a top Central Bank official said.

 

"I'd say we have reasonable expectations that 99.9 percent of the finance and banking system will be ready for the change of centuries without significant problems,'' Central Bank vice-president Martin Lagos told Reuters.

 

"Maybe the only case you could see is a real challenge is Banco Nacion, because it is so big.''

 

"Maybe one can say they will be among the last to complete the job, and that leaves a margin of doubt over whether they will make it on time or not. But they are on course to make it,'' he added.

 

A Banco Nacion spokesman said in an interview that the bank was on target to meet the 2000 deadline, and had scheduled a final systems test for June 30, 1999.

 

Banco Nacion has net assets of $2 billion and a network of 540 branches — many of them in rural areas where private banks are reluctant to set up shop.

 

The Peronist government says it wants to privatize the bank, but President Carlos Menem recently admitted this was unlikely before he ends his term at the end of 1999.

 

The Central Bank is considering a range of measures if banks fail to make the 2000 deadline. These could include fines or even temporary shutdowns, Lagos said.

 

Much of the older programming code in computers around the world has to be manually modified to ensure systems continue to work properly after midnight Decenber 31 1999.

 

The problem is due to a lack of foresight by programmers who saved memory space by abbreviating years to two-digits.

 

Computers with this code still in place will think Jan 1 2000 is January 1, 1900. A bank which does not revise its code runs the risk of horrendous mistakes calculating its clients' interest, balances and debts.

 

Argentina's Central Bank began preparing for the new millennium more than a year ago, and told banks to aim at having their computers ready for 2000 by the end of 1998.

 

"We have carried out two inspections of every bank, and I can say that half of the banks are on schedule,'' Lagos said.

 

Apart from its size, Banco Nacion may have been hampered by a legal dispute with International Business Machines Corp., Lagos said.

 

Banco Nacion canceled a $250 million deal with IBM after allegations the computer giant secured the contract after paying a hefty bribe. Twenty ex-officials from IBM, Banco Nacion and the Argentine government have been indicted and a judge has slapped an injunction on some computer work at Banco Nacion while investigations continue.

 

"It could well be that some work has been delayed (by the injunction),'' Lagos said.

 

But he added that "They have a reasonably realistic schedule of plans to solve this problem.''