Millennium bug fears eased by FSA report

FEARS THAT year 2000 computer problems could bring the banking system to a halt receded yesterday after the Financial Services Authority reported that the one remaining major institution that had been dragging its feet over millennium compliance had been given a clean bill of health.

The FSA, which has been spearheading the financial sector's efforts to avoid Y2K problems, said there were now no "high impact" firms rated "red" according to its traffic-light system. The number of "medium impact" firms - those in the sector of reasonable size but not big enough to pose systemic risk - has gone down from seven to two.

In its last progress report on 12 July, one major institution had failed to satisfy the FSA it would complete its year 2000 preparations on time. Speculation had been rife that it was one of the major high street banks which had serious computer problems. However, they all denied problems despite the FSA's instructions not do so. The FSA has been keen to avoid the institution being identified.

Michael Foot, director of financial supervision at the FSA, said he was pleased at the response to the "intense supervisory oversight" applied by the FSA.

Hamish McRae, page 17