At the beginning of 1997,  a specific project was set up for the Year 2000 conversion of the Bank I.T. systems, including those serving our local and foreign branches network.

In 1998,  the project,  under direct management of the Deputy General Director of Operation, tackled the problems connected with "embedded systems" and the action to be taken with regard to third parties (suppliers, customers, banks).

Planning and control procedures as well as project management criteria were defined in accordance with "best practice" international specifications.   

The earliest activities (1997) concerned the complete inventory of application assets (about 80,000 software programs),  analysis of "Year 2000" impact and definition of corrective activities thereby,  which began the same year, continued in 1998 and should be nearly completed by the end of the current month.  Completion of remaining 2% is scheduled for July, 1999.

As application lot conversion is completed, testing phases take place to first verify the so called "non-regression" (shift to pre-conversion operation mode) and then simulate  future date integrated operation. The latter is conducted in a dedicated environment (hardware, software etc.) and is expected to be completed by September, 1999.

Also,  individual I.T. equipment and applications have been reviewed and corrective action are in progress wherever required.

Particularly important are system tests (Banca d'Italia--Italy's Central Bank--, SWIFT, etc.) where the Bank is present as scheduled.

As for embedded systems, a complete inventory of business critical equipment that may be affected by the millennium change (access control systems, elevators, security systems, air conditioning, etc.) has been completed.  On such equipment, whenever supplier's compliance certification is not deemed sufficient, tests are being conducted in cooperation with suppliers and corrective actions are to follow wherever necessary.

With regard to third parties, all business critical product and service main suppliers have been accounted for and are being contacted to assess their compliance and coordinate the necessary actions.  Whenever supplier compliance cannot be ascertained or it is deemed inadequate,  we intend to contract alternative sources for particularly critical instances.  Moreover,  the "Year 2000" issue has been specifically allowed for in our contract forms.

For our business customers, a special brochure has been edited to illustrate Year 2000 related problems, which includes a self-assessment check-list designed to help our customers in their remediation efforts.  Also, a special financing product--Crescita Duemila (Growth 2000)-- has been created for small and medium enterprises with conversion projects in progress which decide to invest, even if not exclusively, for the year 2000.

The program includes correspondent Banks.  An assessment questionnaire has been sent to foreign Banks (ab. 2,500) and shall be followed by onsite assessment in cases of closer, more significant relationship.

Particular care has been devoted to employee information through internal service letters and the Bank's house-journal.  Moreover, Year 2000 has also been included in staff training programs.

Considering, at last,  the possible repercussions that, notwithstanding our preparation, the so called "domino-effect" could have upon the Institute operation we are preparing, even on the basis of the experience matured during the shift to the Euro, a contingency plan for the transition from 1999 to 2000.   Such a plan, which for our foreign branches has already been completed, shall be furtherly developed and completed within September, and will allow us to face the millennium change with adequate confidence in the Institute operational correctness.

Turin, June 7, 1999