18 June 1999
Ref.
Ole Hvidkjær
J.nr.
505-0003

Year 2000 issue

This note briefly indicates the major steps that have been taken so far by The Danish Financial Supervisory Authority (DFSA) with regard to the supervision of year 2000 preparations in all Danish regulated financial entities.

The planning of year 2000 preparations has followed the recommendations mentioned in the document ‘The Year 2000 - A Challenge for Financial Institutions and Bank Supervisors’ published by the Basle Committee on Banking Supervision september 1997:

1. Promoting increased awareness
The DFSA in 1997/-98 asked the board of all regulated entities to draw up and submit a statement about the year 2000 issue. This statement had to confirm, that the institution had started activities e.g. to identify and solve the risks related to the year 2000 problem and that the board expected to reach the level of readiness before the end of 1999.

The DFSA has also pointed out that auditors should make appropriate comments in the annual reports, if there is any doubt concerning ‘going concern’ after year 2000.

In December 1998 all regulated entities received a letter from the DFSA concerning demand of special business contingency plans regarding year 2000. The letter also stated some deadlines for main activities in year 2000-projects.

2. Establishing targets and benchmarks for the industry & Industry-wide status assessments
The DFSA has not established targets and benchmarks for all financial institutions due to the fact, that the industries them-selves have established working-groups/task-forces to help each other via exchange of experience and to coordinate testing of sector-wide systems. However, the DFSA is monitoring the test-activities.

3. Proactive supervisory pressures
In 1997, 1998 and 1999 the DFSA has made on-site inspections covering the major institutions in all financial sectors and all IT-service providers in the banking industry.

Inspections and off-site measures (mainly check of annual reports and year 2000 statements from the boards and reports from the auditors) are conducted in order to follow the recommendations described by Joint Year 2000 Council on ‘Supervisory Guidance on the Independent Assessment of Financial Institution Year 2000 Preparations’, adopted to the specific Danish industies.