Reserve Bank questions Westpac on mainframe outage

New Zealand's Reserve Bank has issued a "please explain" notice to Westpac following a mainframe outage in Australia that put at risk the bank's ability to make international settlements.

The outage took out the gateway early on June 20 for the New Zealand subsidiary to access the Swift international settlement network. It wasn't until 10pm that Westpac New Zealand was able to resume making settlements.

Westpac NZ CIO Ross Hughson has confirmed to Computerworld that the Reserve Bank has asked a number of questions about the problem. However, the Reserve Bank refuses to comment.

The crash is understood to have occurred when Westpac Australia was upgrading the microcode on an IBM Shark disk. Previous upgrades at other organizations had been done without a hitch but it seems the disk may have been faulty.

A spokesman for the bank, Ian Bonnar, said at the time that some customers were inconvenienced but it didn't cost them anything. "There was no material affect," he says. "We put through settlements late at night and first thing in the morning."

While the Reserve Bank will not comment specifically about the Westpac outage, a spokesman says: "The payment and settlement system is a critical element in the financial system, both in respect of domestic and international payments. In its capacity as supervisor of registered banks and overseer of the payment system in New Zealand, the Reserve Bank attaches great importance to ensuring that the payment and settlement systems remain sound, reliable and efficient, and that any difficulties are quickly and effectively rectified.

"As part of this, we place emphasis on banks maintaining strong business continuity arrangements for their payment and settlement systems, and for other key functionality. The Reserve Bank's outsourcing policy is an important part of this. In addition, the Reserve Bank has well-developed contingencies in place within its own operations to respond to difficulties in the payment and settlement systems, including maintaining the capacity to provide liquidity to facilitate settlement of obligations if required."

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