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Year 2000 advice

Document date:  Thu 18 Jun 1998
Published:  Thu 18 Jun 1998 00:00:00
Document No:  138251
Document part:  A
Market Flag:  N
Classification: 

HOMEX - Melbourne                                                     

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OVERVIEW

ANZ is very aware of the risks associated with Year 2000. ANZ depends
extensively on computer systems for its core business operations and,
having identified the problems early, is putting significant effort
into addressing Year 2000 issues.

All of ANZ's systems have been analysed and work is well progressed
to implement and test the required changes. Repair and full systems
testing of ANZ's internal applications are on schedule for completion
and implementation by December 1998 (which conforms with the Basle
Committee on Banking Supervision's timetable for action on Year
2000). Interbank clearing systems are on target to commence external
industry testing with other institutions in October 1998. This
cross-industry testing is scheduled to continue through 1999, with
completion expected 30 June 1999. Finally, a thorough review of third
party products and services is underway.


STATUS

ANZ's Year 2000 program is well advanced and on target for completion
as noted above. The key components of ANZ's program include the
following:


INTERNAL SYSTEMS

All ANZ's systems have been analysed and work is underway to develop,
implement and test the required changes. Full repair and systems
testing of internal applications is on schedule for completion by
December 1998, with the majority of systems repaired as of May 31,
1998. ANZ is on track to commence external industry testing in
October 1998. ANZ intends that, by December 1998, the infrastructure
that supports its processing environment will be Year 2000 ready, and
this work is also on schedule.


EXTERNAL VENDORS AND PARTNERS

For externally provided products and services, ANZ is investigating
each supplier and the products or services provided. ANZ then
determines the necessary action to take, including testing. ANZ
intends that, by 31 December 1998, all suppliers of goods or services
will be either committed to Year 2000 compliance and have supplied
compliant product, or will be replaced.


CUSTOMERS

ANZ is communicating with its customers to help them understand the
risks of the Year 2000 issue and how they might prepare themselves.
ANZ is sharing its experience of Year 2000 issues with its customers
through business seminars on the Year 2000, booklets, regular
publications, ANZ's Internet site and collaboration with industry
groups.

ANZ is also assessing the Year 2000 preparedness of its business
customers as it recognises the potential of some businesses to suffer
significant disruption from Year 2000 problems.


PREMISES

ANZ currently occupies both leased and owned premises in Australia
and overseas. A global inventory of the building infrastructure
systems is near completion.

Year 2000 compliance information, together with appropriate
corrective action, has already been identified and planned for all
buildings critical to ANZ's operations. Compliance

information and corrective planning for the remaining buildings will
be completed during the third quarter of 1998.

Corrective action for critical buildings is expected to be completed
by December 31, 1998. Completion for the remaining buildings is
expected by June 30, 1999.


ANZ'S DEFINITION OF COMPLIANCE

ANZ is using the British Standards Institution definition of
compliance (BSI-DISC PD2000-1), and has developed the following
technical statement in support of this:

"Any data processing asset must meet the following four criteria to
be considered Year 2000 compliant:

* General Integrity: No value for current date will cause
interruptions in general computer operations, access equipment, or
machine operations for dates that span across year ends.

* Date Integrity: All manipulations of time-related data (dates,
durations, days of week, etc) will produce desired results for all
valid date values within the application.

* Explicit Century: Date elements in all file interfaces and in data
storage fields are required, in general, to contain a century data
field to eliminate date ambiguity. Exceptions might include existing
data archives.

* Implicit Century: For any date element represented without century,
the correct century is unambiguous for all screens, reports and
manipulations involving that element."


PROGRAM MANAGEMENT AND CONTROL

ANZ has set up a Group 2000 Project to provide ongoing direction,
guidance and management of the issue across the organisation. A
high-level Steering Committee is overseeing the project. It is headed
by John Ries, who is an Executive Director.

The Group 2000 Project is tightly controlled and overseen by senior
management and the ANZ Board who receive regular reports on progress.
ANZ has a comprehensive Year 2000 management plan that conforms with
international standards (ISO 9002). Each activity must pass
checkpoints. ANZ closely monitors effort against the plan. Internal
auditors review the project's progress, and report monthly to
management, which in turn reports to the ANZ Board of Directors.


CONTINGENCY PLANS

ANZ is reviewing all Year 2000 internal and external dependencies and
establishing appropriate contingency plans. ANZ is currently
establishing a high level 'Managing the Event' taskforce to plan for
major potential scenarios and detailed activities in the period
immediately prior to and after 31 December 1999.


COSTS

The estimate for total capital and operating cost to ANZ, for the
period until 2000, has been revised down from A$200 million to A$183
million. The reduction results from the ability to repair the current
cheque processing equipment originally thought to require
replacement. The remaining costs contain a 15% contingency.

This does not all represent additional cost to the organisation as
ANZ is using existing resources wherever possible to complete the
necessary work, although a small amount of work has been outsourced.
management, contingency planning, communication and risk management.

The four major Australian banks (including ANZ) and the Reserve Bank
of Australia have formed the Year 2000 Interbank Working Group (IWG),
to address common Year 2000 issues affecting the banking community,
its customers and its shareholders. Subgroups have been established
to manage issues associated with telecommunication carriers, vendors
and non- telecommunication service providers, interbank testing,
external communication, and property & building services (including
utilities). A major function of the interbank testing subgroup is to
co-ordinate the testing of major Australian clearing streams. This is
being achieved in co-operation with the Australian Payments Clearing
Association and the Australian Bankers' Association. An interbank
testing program will run from the latter half of 1998 throughout
1999. ANZ is on target to meet the first major clearing stream
testing, scheduled to commence in October 1998.

ANZ operates in 43 countries, and has relationships with overseas
regulators, banks, industry bodies and working groups. Where
appropriate, ANZ is working with these entities to establish similar
co-operative programs.


COMMUNICATION

ANZ has implemented a comprehensive communications plan for all its
stakeholders. ANZ is communicating with its customers to help them
understand the risks of the Year 2000 issue and how they might
prepare themselves. ANZ is in the process of communicating with all
<~>oblems and repair or replace as necessary. ANZ is keeping its

shareholders informed through the Annual Report, results releases and
forums such as the Annual General Meeting.

For more information

* Visit ANZ's Year 2000 website, at http://www.anz.com/y2k/, or send
email to y2k@anz.com.

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