Banks add Y2K issue to credit check lists

Banks are now including year 2000 readiness as part of their credit risk assessment for business customers. The ANZ Bank is seeking information from customers on how they are dealing with their year 2000 concerns, as part of the bank's ongoing credit checks. According to an internal ANZ circular, the bank believes that many of its business customers will be affected by the year 2000 issue. The circular says "... it is important that customer year 2000 risk is considered in the context of the overall customer credit risk assessment. Customers who are not year 2000 ready by 1999 may have little future, either as a business or as a customer of our bank."

Banks are now including year 2000 readiness as part of their credit risk assessment for business customers.

The ANZ Bank is seeking information from customers on how they are dealing with their year 2000 concerns. The initiative is part of the bank’s ongoing credit checks.

According to an internal ANZ circular, the bank believes that many of its business customers will be affected by the year 2000 issue. The circular says “... it is important that customer year 2000 risk is considered in the context of the overall customer credit risk assessment. Customers who are not year 2000 ready by 1999 may have little future, either as a business or as a customer of our bank.” The bank is also considering including a clause in customers’ security documentation whereby customers would agree to provide the bank with information on how they are dealing with year 2000 issues affecting their business.

ANZ credit manager of Graeme Irving would not reveal how many customers may be affected. He says at the moment checks are confined to discussions with customers to establish their awareness of the issues. Asked what would happen to customers who aren’t year 2000 ready by 1999, he says: “At the end of the day their business will collapse. We want to ensure that we do everything possible to get customers into a position where that won’t happen.”

He says the scenario of the bank withdrawing a customer’s credit facility for failure to address year 2000 issues is an extreme one which he doesn’t see happening.

The bank may also be willing to assist customers in finding a consultant to assess and aid progress toward year 2000 compliance, he says. “We’re taking a low-key approach at the moment and research indicates that there is a good deal of awareness of the problem.”

Dave Bugden, Countrywide Bank’s group manager for credit, says the bank has included year 2000 risks as part of its credit risk assessment for the past two months.

“We had developed a year 2000 questionnaire and asked each relationship manager to go through and assess credit risks with each customer. Countrywide also distributes a business banking newsletter on a monthly basis which in the past six months has had articles on the problem, and we have a new brochure for business clients about year 2000 risk assessment.

“We’re trying to take a collaborative and consultative approach with certain customers who may be at risk.”

Bugden says the bank does not have a specific time frame dictating when customers should be year 2000-ready. “The earlier, the better,” he says.

National Bank is also including year 2000 compliance as criteria in its credit risk assessments and Computerworld understands that the BNZ has a similar policy, although bank officials were unable to comment before deadline.

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