Division of Finance plans to crack down on Y2K

Year 2000 compliance of the state's financial institutions is now an important part of the Missouri Division of Finance's regulatory examinations.

A recent publication from the division said about 88 percent of Missouri's banks are making satisfactory progress in addressing the computer glitches associated with the coming millennium. The state division said that figure is about the same as reported nationally by the Federal Deposit Insurance Corporation.

Local bank executives have noted the increased scrutiny from state regulators. In a recently published report, the Division of Finance presented a short list of the problems that caused the agency to issue "needs improvement" ratings.

"In cases where management's efforts have been inadequate, due to the critical nature of the problem and non-negotiable deadline, regulators will likely 'assist' the board of directors in making Year 2000 a high priority by placing the bank under administrative action," the Missouri Division of Finance Update said.

The publication said the computer fixes should receive attention "from the highest levels in (a bank's) organization. Examiners want to see written evidence of ... activities, in addition to management's comments on progress."

Among the items state regulators noted as reasons for banks receiving poor ratings, according to state regulators:

?No written plan. "Examiners will be looking for a plan in writing, adopted by the board, that includes budget data, specific target dates for completion, and systems for tracking progress."

?Failure to provide for status reports. "Examiners will be checking to see that the team or committee responsible for Y2K issues has been designated by the board of directors and that periodic status reports are made to the directors. Board minutes should reflect this action and ongoing board discussion. The reports should include progress in meeting timetables for corrective measures."

?No checks on vendors and service providers. "Management needs to show examiners they are proactive in seeking vendor/provider status reports and testing dates."

?No testing plan. "Plans and strategies for testing will be a focus of examiner attention the next few months. Again, document in writing when specific systems will be ready for testing."

?Failure to contact customers. "Document the fact that you have identified customers whose computer systems or business could be significantly affected by Y2K problems. Include a Y2K assessment as part of the review on loan requests."

?No contingency plan. "Another area for close review at your next examiner review. Again, document it. Establish trigger dates for alternative action if testing dates or conversion timetables are not met. Figure out what your options are and have a backup plan for mission-critical systems."[[In-content Ad]]