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Technology Stocks : Y2K (Year 2000) Stocks: An Investment Discussion -- Ignore unavailable to you. Want to Upgrade?

To: gerald tseng who wrote (11708)	5/22/1998 3:37:00 AM
From: R. Bond	Read Replies (1) \| Respond to of 13949

May 20, 1998 Japanese Banks Could Also Face Millennium Bug Moody's Dow Jones Newswires TOKYO -- Moody's Investors Service said Wednesday that Japanese banks claim to have no major problems with the year 2000 problem, and how they achieved that state of affairs is something of a mystery. 'There are a lot of question marks about major Japanese banks' degree of preparation for the year 2000,' the rating agency said in a report. Japanese banks have huge balance sheets, and they play an extensive role in international banking transactions. If they did have significant year 2000 problems, and did not fix them, that could create risks for other banks that trade with them, as well as significant issues for regulators and international clearing mechanisms, Moody's said. Moody's is concerned that Japanese bank executives do not appear to be taking the potential problem as seriously as the managements of other global financial institutions. Chase plans to spend $300 million and Citicorp (CCI) is paying $600 million to address this deep-rooted problem. But one major Japanese bank has allotted only $60 million to handle this difficulty, the rating agency said. 'And a recent survey showed that 49 Japanese banks planned to spend a total of $249 million on year 2000 issues - barely equal to J.P. Morgan & Co's (JPM) budget alone. Under these circumstances, it seems reasonable to ask, is that enough?' Moody's analysts said. 'We hear many reasons from Japanese bankers about why they are not particularly worried about the 'Millennium Bug'. The rationales given range from 'we use Japanese computers' to 'our computers use the Emperor's calendar," the report said. Moody's notes that such explanations raise numerous questions. 'We understand that Japanese computers use IBM-compatible chips and standards, and Japanese corporations frequently use Western-based software in any case,' the analysts said. Although computers seem to use special dates in Japan, the analysts are skeptical. 'We believe that - in most instances - the computer's internal clock is programmed according to the Gregorian calendar, and it displays a traditional Japanese date just as a courtesy to the user. 'Furthermore, Japanese banks run substantial operations in financial centers all over the world that may use Western calendars, and they trade with couterparties that certainly do,' Moody's said. Japanese banks may be in a unique position on year 2000 issues, the analysts conclude, but they also may simply be too distracted by more pressing, immediate problems, massive amounts of bad loans, and an economy that may be in recession. 'So they have a year 1998 problem, and it would not be surprising if management put possible computer problems on the back burner,' the rating agency said. Copyright c 1998 Dow Jones & Company, Inc. All Rights Reserved.