House purchases and big UK and European transactions were disrupted on Thursday after an outage at the Swift international cross border payments system that lasted for several hours.
The Bank of England said a “global payments issue” affecting the central bank’s Chaps service, which is used in the UK for big wholesale transactions as well as retail ones such as house purchases, had delayed “some high value and time sensitive payments”.
The BoE later said payments via Chaps had resumed. The European Central Bank also said its settlements system had been affected by the Swift outage.
The outage caused brief chaos in the UK’s housing market, which is reliant on the Chaps service for completions.
Estate agent Foxtons said two law firms it works with had reported delays of at least four hours for funds to be transferred.
Swift, which facilitates cross-border payments between banks, said in a statement on Thursday that it experienced an “operational incident delaying the processing of services”, adding this was not caused by a cyber attack.
Swift said it “takes any operational incident extremely seriously, is conducting a full investigation and apologises for the disruption caused”.
The BoE initially flagged the Chaps service problem on Thursday afternoon, saying it was “working closely with a third-party supplier, industry and other authorities to resolve the issue as promptly as possible”.
The BoE later said: “We are pleased to confirm that the third-party supplier has restored service following their earlier issues, and Chaps payments are settling as normal.
“We expect that all payments received by the bank today will be settled by the end of the day.”
The ECB said it had delayed by one hour the closing of its settlements system because of an “issue impacting Swift”.
With fewer Eurozone banks reliant on the Swift system compared to UK financial institutions, its problem caused less disruption for the ECB than the BoE, according to one person briefed on the matter, who said the issue was having an impact around the world.
The Chaps service is an automated payments clearing system the BoE has managed since 2017. Its 35 direct participating banks are supervised by the Payments Systems Regulator.
Payments via Chaps only make up about 0.5 per cent of total transaction volumes in the UK. But their total value accounts for about 92 per cent of sterling payments.
Several thousands of financial institutions make Chaps payments. Last year, a record 51mn payments were processed on the service, which handled £363bn worth of transactions daily in June on average.
Chaps was hit by a computer crash in August last year resulting in thousands of house purchases being delayed.
Additional reporting by Joshua Franklin in New York