Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Discuss Year 2000 Issues -- Ignore unavailable to you. Want to Upgrade?

To: Dan Hamilton who wrote (1456)	4/14/1998 12:44:00 PM
From: gamesmistress	Read Replies (2) \| Respond to of 9818

BankAmerica/NationsBank Raises Another Thorny Y2K Problem Excellent article in this am's TheStreet.com. Discusses the impact of Y2K on these banks (BoA probably OK, NationsBank not) and also what the SEC and the Office of Currency are doing to ensure Y2K compliance. Excerpts: While some on the Street might be counting on back-office cuts to fuel the merger, the massive Year 2000 undertaking by both NationsBank and BankAmerica will have their information technology departments tied in knots for the next 20 months at the very least. After more than a dozen interviews, a review of Securities and Exchange Commission documents and discussions with off-the-record sources who've worked for both banks, it becomes clear that the cost of Year 2000 compliance for the combined entity could go well beyond $500 million. And some sources say that NationsBank, in particular, may have vastly underestimated its Y2K problem. n a March 16 SEC filing... B of A cites Y2K as chief among the "uncertainties" in its future. "We must find new ways to use our systems to remain competitive in those businesses," says the filing. "Our immediate technology objective is making our systems Year 2000 ompliant. Our goal is that every unit at BankAmerica will implement and begin testing modifications by the end of 1998." And estimated cost? A cool $380 million, of which $90 million was spent last year. The BankAmerica Y2K remediation program is slated to go right through 2000. By most estimates, NationsBank is a larger, more complex bank than BankAmerica. It's grown to $285 billion in assets through multiple acquisitions of smallish, regional banks. That means more computer networks to integrate, more potential for missed Y2K snafus. BankAmerica has $257 billion in assets, acquired in a less pell-mell manner. But NationsBank's public estimate for its Year 2000 fix is a fraction of BankAmerica's -- according to NationsBank, its Y2K fix will cost just $120 million, $25 million of which has been spent. "BankAmerica has, essentially, one system," says Howard Adams, a Year 2000 consultant with Productivity Solutions of Phoenix. "And that's a big, expensive problem to fix. But NationsBank, coming off the heels of so many mergers, is probably running five or six different systems. Think of it; if you have a program that does a loan calculation with a date-specific formula, you only have to change that formula once -- it doesn't matter if you've got 100 loans or 10,000 loans. But if you have five different systems, you have to find and change five different formulas. And let me tell you something: You don't have five formulas -- you have 50,000. So you really need five different project managers. I think that NationsBank, proportionally, will face a higher cost for Y2K." The Office of the Comptroller of the Currency -- an important federal banking regulator -- is raising the Y2K bar on such mergers. A recent memo sent to CEOs of all national banks from the OCC specifically warns that Y2K plans will be scrutinized for all new mergers. "Code enhancements, revisions and hardware upgrades and other associated changes should be largely completed by December 31 1998. In additions for mission critical applications the programming changes should be largely completed and testing should be well underway." It adds, ominously. "The OCC may deny a filing... if the problems represent a significant supervisory concern."