Bank of England payments system restored after outage

By David Milliken

LONDON (Reuters) -The Bank of England said on Thursday it had suffered a temporary outage to its CHAPS interbank payment system, which handles more than 360 billion pounds ($467 billion) on an average day, but expected all transactions to be settled by the end of the day.

The failure in the high-value payment system related to a problem at Swift, the Belgium-based organisation which banks use to send secure messages internationally.

"We are pleased to confirm that the third party supplier has restored service following their earlier issues, and CHAPS payments are settling as normal," the BoE said.

Retail payment systems, including debit cards and cash machines, had been unaffected, it added.

Most Britons only come across CHAPS if they make a high-value payment like a house purchase and a prolonged outage can potentially leave home-movers stranded.

But CHAPS accounts for more than 90% of total sterling payments by value as banks use it to settle sterling money market and foreign exchange transactions, and large businesses use it for time-sensitive payments to suppliers and tax authorities.

The CHAPS system has suffered technical problems before, including in August last year and in 2014 when the BoE's Real-Time Gross Settlement system, which underpins CHAPS, did not work normally for several hours.

Swift said Thursday's problem had been caused by an operational incident which delayed the processing of services it provided to customers, including those who operated financial market infrastructure like CHAPS.

"This incident was not cyber-related, and our technical teams have successfully restored impacted services," Swift said in a statement.

The BoE has previously warned the banks which it regulates not to be overly reliant on third-party infrastructure.

($1 = 0.7709 pounds)

(Additional reporting by Muvija M and Sachin Ravikumar; Writing by William Schomberg and David Milliken; editing by Diane Craft)