Bermuda Banks

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Bermuda Banks

Mostly locally owned, as required by local law, with one major exception

To refer by e-mail to this file use "bermuda-online.org/banking.htm" as your Subject.

Bermuda is not an offshore international banking center. International banks, which in other offshore locations and also in most onshore jurisdictions, are allowed to register as banks and can operate in those countries, are not allowed in Bermuda to register as banks and may not operate as banks in Bermuda for the general population.

There are now four banks, all local or mostly so. All registered banks in Bermuda must by law - local, not United Kingdom law - be at least 60% beneficially owned by Bermudians. There is an understanding from the Bermuda Government that their Head Offices will remain in Bermuda, their staff in Bermuda will be majority Bermudian and their mind, management and control will be Bermudian. The exception to this is the first-named bank, below:

Their investment vehicles and services have not been registered or licensed under any United States securities legislation and are not being offered, directly or indirectly, in the United States or in any of its territories or possessions or areas subject to its jurisdiction or to its citizens or persons thereof.

Bermuda banks

Free courtesy hyperlinks (links) to their main websites, which include full details of their histories and operations, will be shown gladly, to give their full details as Bermuda resources, once they return the courtesy with a free reciprocal link to our main Bermuda Online website at http://www.bermuda-online.org. See our Links and Mentions policy at http://www.bermuda-online.org/links.htm.

Bank of Bermuda/HSBC

Formerly the Bank of Bermuda Limited. Since February 2004 owned 100% by HSBC - for US$1.3 billion. Harbourview Centre, Front and Reid Streets, Hamilton, formerly the site of Trimingham's department store (until May 2010 at 6 Front Street, Albouy's Point, Hamilton HM 11, now closed) and with branches elsewhere, including overseas. Telephone 295-4000. Fax 295-7093. Bermuda's largest and second-oldest bank. In 1889, they established the beginnings of a second major banking house, as something of a going concern - by taking over the 3-year old branch in Bermuda of the Merchants' Bank of Halifax, Nova Scotia which split off in 1886 from its original agency-holder, N. T. Butterfield & Son Ltd. They called their new bank the Bank of Bermuda Ltd. It was formally established and incorporated in 1890 and is now the largest bank in Bermuda by a considerable margin. Once beneficially locally owned - no longer - it has about 2,150 employees in Bermuda and worldwide. Like the other two banks, it owns its Bermuda real estate. More than 42% of the bank's overall revenue comes from its division called Global Fund Services, with its 111 staff. Its fund management portfolio is immense, big business in Bermuda. Other subsidiaries include Bank of Bermuda Lux SA - Universal based in Luxembourg.

Butterfield Bank Limited

Formerly the Bank of N. T. Butterfield & Son Ltd. 65 Front & Reid Streets, Hamilton HM 12. Phone USA-code (441) 295-1111. P. O. Box HM 195, Hamilton HM AX. 789. A publicly traded and publicly owned local financial institution which has, because of its unique position within the local security market place, probably received far more scrutiny lately than its competitors. It provides retail banking and full international business services. Bermuda's oldest and second-largest bank. Originated in 1815 by Nathanial T. Butterfield. Established in 1858. As N. T. Butterfield & Son, it held from the early 1860s until 1886 - when it was acquired by the new Bank of Bermuda Ltd - the Bermuda branch of the Merchants' Bank of Halifax, Nova Scotia. Incorporated in 1904. Subsidiaries in Bermuda include Bank of Butterfield Executor & Trustee Company Ltd, Palmar Ltd - a nominee company, Field Nominees Ltd, Butterfield Trust (Bermuda) Limited, a mortgage company. Abroad, they include Leopold Joseph, a City of London merchant bank since 1919; Matherson Bank in England, now renamed the Bank of N. T. Butterfield & Son Ltd (UK); Butterfield International Private Office Ltd. also in London; Thorand Bank & Trust Company of Nassau, Bahamas - now renamed Bank of Butterfield (Bahamas) Ltd; The Mutual Bank of the Caribbean Inc. in Barbados (now renamed Bank of Butterfield (Barbados) Ltd); Bank of Butterfield International (Cayman) Ltd in Grand Cayman; and Butterfield Fund Services (Canada) Ltd. of Halifax, Nova Scotia. There are also Butterfield Securities Ltd; Butterfield Bermuda Fund Ltd; Butterfield Capital Appreciation Bond Fund Ltd.; Butterfield Select Invest Fund Ltd;Butterfield US Dollar Bond Fund Ltd. and Butterfield Systematic Equity Fund Ltd. In March 2010 the bank announced it had raised $550 million of new capital from mostly foreign investors and replaced Alan Thompson as chief executive officer. The news came as the bank declared a net loss of $213.4 million for 2009 and suspended all dividend payments on common shares "until the Bank returns to a period of sustainable profitability." Private equity giant Carlyle Group and the Canadian Imperial Bank of Commerce (CIBC) were the main investors, each ploughing $150 million into the bank in exchange for preferred and common shares, priced at $1.21 apiece. Other investors include the Bermuda Government Pension Funds, as well as the Wellcome Trust, Julian Robertson and Goshen Investments LLC. Shareholders were not given the opportunity to vote on the massive transaction after Butterfield received an exemption from the Bermuda Stock Exchange. A rights offering in April 2010 gave shareholders the chance to invest an additional $130 million in newly issued shares, also priced at $1.21. Trading in Butterfield common shares, which then closed at $2.85, went even lower, was suspended on the Bermuda Stock Exchange but has since resumed. The new capital would enable the bank to sell off the remainder of the hundreds of millions of dollars worth of investments backed by US mortgages that have cost the bank dearly over the past two years. In 2009, Butterfield raised $200 million in a preference share issue that was guaranteed by Government. The intention was to ensure the bank had a sufficient capital buffer to withstand "a severe economic downturn." But with income squeezed by low interest rates, the lack of a strong recovery in the US housing market to boost the value of its troubled assets and problems with some major loans made to Bermuda tourism-related projects, the bank saw the need for an additional capital raise just nine months later. In 2010 to date the bank has made a very modest profit. Common shares were selling at an average of $1.50 in August 2010.

Bermuda Commercial Bank Ltd (BCB)

19 Par-La-Ville Road, Hamilton HM 11, PO Box HM1748, Hamilton HM GX, Telephone: 441.295.5678 Fax: 441.295.4759. Formed by an Act of Parliament in February, 1969 under the name of The Provident People’s Bank Limited. In May 1969, this changed to Bermuda Provident Bank Limited. In 1984, the name was again changed to Bermuda Commercial Bank Limited. A privately-held bank which legally does not have to share its financial reports with the public, only with the limited group of private shareholders of the firm. On December 30, 2009 according to the Bermuda Stock Exchange (BSX) with which the bank is listed it is majority-owned by First Curacao International Bank N.V (FCIB) a licensed bank operating in the Netherlands Antilles. In 1993, FCIB took over management from Barclays Bank plc, which had managed BCB from its inception. The number of shares now held by FCIB from December 2009 is 3,461,577, equating to 54.49 percent of the total number of issued and fully paid shares of BCB, which then stood at 6,352,687 shares.

On April 15, 2010 BCB announced it has sold a controlling interest to Bermuda-based exempted company Permanent Investments Ltd. in a deal worth around $34.2 million. The bank's new owner, which is owned and funded by four investment funds and companies, has bought 3.46 million shares from the First Curacao International Bank (FCIB), which gives Permanent a 54 percent stake. Permanent will make a cash offer of $9.88 apiece for all the remaining shares, the same price it paid for its controlling interest. This will give BCB shareholders a 27 percent premium on Wednesday's closing price of $7.75. The deal values the bank at around $63.3 million, which is below its book value. BCB's last annual earnings statement, showed the bank had shareholders' equity of $75 million at the end of September last year. Bermudian Michael Collier, chairman of Belco owner the Ascendant Group Ltd. and former chief executive officer of Butterfield Bank, will join the board as a Permanent nominee. Mr. Collier said yesterday that three of the four entities behind Permanent were based overseas, while one was a Bermuda exempted company. He said details would be revealed in the tender offer letter, which will be mailed to BCB shareholders not later than April 30 and which will include information on how shareholders can accept the offer. Other incoming directors are Warren McLeland, a former managing director of Chase Manhattan Bank, and Eric Stobart, a former managing director and finance director of Hill Samuel Bank. All three new directors sit on the board of Bermuda-based companies Utilico Ltd., of which Mr. Collier is chairman, and Utilico Finance Ltd. Utilico invests in a portfolio of primarily in energy companies. Mr. McLeland is also a director of the Australian company Wilson HTM Investment Group, who entered into a strategic relationship with Deutsche Bank in 2005 to focus on growing its private wealth management and mid-market corporate finance business. He also sits on the board of Trust Company of Australia, Eclectic Investment Trust plc and Intellect Holdings Ltd. Mr. Stobart is a trustee of the UK-based Lloyd's TSB Group pension scheme and chairman of its Investment Review Panel. Anthony Cijntje, Geomaly Martes, and Michael Cranfield resigned from the BCB board following the sale of FCIB's interests in the bank. Mr. Cranfield remains as chief information officer. BCB's chief operating officer is Horst Finkbeiner. The 41-year-old bank has been searching for a buyer for the past four years and Mr. Finkbeiner estimated it had talked with 50 to 60 different interested parties during that time. Two years ago, BCB found a buyer for the bank and agreed terms, only for the then-controlling shareholder, FCIB, to pull the plug on the deal. FCIB was then acting under instruction from the Central Bank of the Netherlands Antilles, which took control of the Curacao bank following an investigation by the Dutch authorities into alleged money laundering and other illegalities in September 2006. The investigation resulted in former BCB chairman and FCIB principal John Deuss being questioned by Dutch authorities. BCB did not invest in any of the securities backed by US mortgages or credit that have proved problematic for many financial institutions around the world. Record low interest rates have damaged its profitability, however, and the bank recorded a loss of $380,000 during its last fiscal year through September 2009. The bank did not pay a dividend to shareholders in 2009. BCB advised its shareholders to consider Permanent's $9.88 tender offer. The current chairman of BCB is Michael Collier, once a long-term employee of and senior executive with Butterfield Bank.

Capital G Bank Limited

21-25 Reid Street. P. O. Box HM 1194, Hamilton HM EX. Phone (441) 296-6969. Fax (441) 296-7701. Bermuda's fourth bank. Locally owned, privately held, owned by the Edmund Gibbons Company Ltd of Bermuda. It started taking deposits more than 60 years ago in an older name. In March 2009 it announced its parent company had added $20 million to bolster the bank's "capital buffer" to levels that "far surpass international standards."

ATMs

The Bank of Bermuda and Bank of N. T. Butterfield & Son have Automatic Teller Machines (ATMs) scattered throughout Bermuda, plus full service offices in and beyond the City of Hamilton. Their loan policies are ultra conservative, with loans constituting under 15% of total deposits, creating a low loan portfolio exposure. They have not lent money for risky ventures in the Third World, so have avoided all the problems experienced by many other banks in other countries. Mostly, they concentrate on fee driven, low risk business. They have gone multi-national, with operations (branches, representative offices or wholly owned subsidiaries) in Barbados (Butterfield Barbados Ltd), the Cayman Islands, Channel Isles, Cook Islands, Dublin, Hong Kong, Isle of Man, London, Luxembourg, Mauritius, New York, New Zealand, Singapore and Western Samoa.

Most American, Canadian & other visitors will find that if they need cash in Bermuda, local ATMs from either of the two largest local banks will service them. But the dollar notes they dispense will be in non-exportable Bermuda dollars only (which cannot be cashed overseas).

Bermuda Government involvement

The Bermuda Government benefits substantially from licensing and regulation, via the Bermuda Monetary Authority, of Bermuda's banks. There is NO central bank in Bermuda. Instead, the Bermuda Monetary Authority is the regulatory authority and the relevant pieces of legislation are The Banks & Deposit Companies Act 1999 and The Banking Appeal Tribunal Regulations 2001.

It has long been argued that that there is no need for Bermuda to 'import' banks. It is why Bermuda has a banking economic buttress of the type found in Switzerland but not in Barbados, the Cayman Islands, Guernsey, Hong Kong, Ireland, Isle of Man, Jersey, London, Luxembourg, Monaco, Paris, New York or Singapore, where banks which are not local are allowed to operate both in their jurisdiction and overseas.

Certainly, in services, facilities and competence the local banks benefit the economy generally and enjoy many advantages. The Bermuda Government charges them the highest banking fees anywhere in the world, so their interest rates are lower, interest bearing checking accounts do not exist, internationally cost competitive and comparable banking fees are not offered and service fees to consumers are the highest in the world.

In addition to the banking fees it imposes, the Bermuda Government counts on the banks to be labor intensive. They pay countless millions of dollars in Employment Tax. Employees pay these taxes as well. The government also places legislative restraints on these banks, in terms of what they cannot do overseas, that no other international offshore jurisdiction would impose.

The present Bermuda Government has not approved any local bank as the depository of public funds. Instead, it was awarded this to the Bank of New York.

Bermuda's first bank and currency note came from Halifax, NS, Canada

First Bermuda Banknote, 1883. A Canadian $5 note printed for the Merchant Bank of Halifax and converted to a £1 1 shilling (one guinea) note for use in Bermuda.

The Merchants' Bank of Halifax (later, the Royal Bank of Canada), established in Halifax in 1864, opened an agency in Bermuda in 1882 via the local Butterfield's Bank. On October 6, 1883, it issued its own money for use in Bermuda. It began circulating a $5 Canadian note printed by the American Bank Note Company in Ottawa for its bank in Halifax and converted to a one pound, one shilling (guinea) note for use in Bermuda. This Canadian/Bermudian note has considerable historical value as the first "Bermudian" paper money to arrive in Bermuda; some 31 years before Bermuda got its own official currency notes. Later, the Merchants' Bank of Halifax divorced itself from Butterfield's Bank in Bermuda and ran its own branch bank in Bermuda for four years. Thus it also became the first (and only) non-Bermudian bank in Bermuda. Later yet, the Merchants' Bank of Halifax's Bermuda operation was bought out by banking newcomers in Bermuda who established from it the present day Bank of Bermuda Ltd.

Applicable Bermuda laws

Bermuda Bankers Association (BBA)

Since November 2007. Funded by its members. Serves as the main representative body for banks and deposit taking/lending firms on the Island. Similar to banker's associations in other important financial jurisdictions, the BBA will serve as an industry think tank, lobby group and a forum for increased cooperation on non-competitive issues among the Island's banks. The BBA's stated mission is to be a leading contributor in the development of public policy on the financial services sector and to ensure that the legal and regulatory framework governing banks operates in an efficient, effective and fair manner. will actively cooperate with other organizations locally and internationally in developing industry standards and conventions to enhance the efficiency and soundness of the financial system. In addition, it will endeavor to encourage compliance with the highest ethical standards and risk management practices within the industry to ensure that Bermuda's reputation as a respected international financial centre is protected. All the Island's chartered banks and lending/deposit taking institutions are eligible for membership and currently all banks doing business in Bermuda are members. The Bermuda Monetary Authority, which is responsible for the licensing, supervision and regulation of all financial institutions in Bermuda (including those conducting deposit taking, insurance, investment and trust business), will act as an ex officio observer of the BBA.

Bermuda's banking in a global perspective

Bermuda has links with principal banking regulatory authorities world-wide, especially with the Offshore Group of Banking Supervisors and the Basle Committee on Banking Supervision. The former first met in 1980. It allows offshore centers to define their common ground more exactly; identify the extent to which the exchange of information with other supervisory authorities can be compatible with their general function as offshore refuges from the fiscal and monetary policies of other countries; and develop/refine a positive, constructive and coordinated response to the approaches of other banking supervisory authorities.

The essential elements of banking regulation in each offshore center in the Offshore Group are conditions of membership which require effective supervision through effective legislation; an applied commitment to the principles of effective banking supervision, as embodied in the Basle Committee's Concordat, its supplement and minimum standards requirements; and with the necessary administration in place to effect the commitment. Jurisdictional members of the Offshore Group of Banking Supervisors are also committed to the implementation of the Basle Committee's Capital Concord and in almost all cases have set, and are achieving, more rigorous risk asset ratio requirements than the eight percent minimum set by the Basle Committee.

The Offshore Group of Banking Supervisors has no enforcement powers over its members. But, like the Basle Committee, it seeks to promote the effective supervision of banks on the peer group principle. Thus, standards are set by the conditions of membership. The Basle Committee on Banking Supervision was established in 1974 by the central bank governors of the Group of Ten industrialized countries to strengthen collaboration among national authorities in their prudential supervision of international banking. It meets four times a year at the Bank of International Settlements in Basle, Switzerland, hence its name. Membership comprises senior officials of the central banks and supervisory agencies of the Group of Ten countries and the Grand Duchy of Luxembourg.

The Basle Committee's reports and recommendations are not legally binding. But through discussion of supervisory issues, it reaches consensus on best practices. These are embodied in the Basle Concordat, first drawn up in 1975 and extended subsequently. The Basle Committee has extended its work considerably over the last decade, to keep abreast of major developments in banking, especially the progressive internationalization of banking.

Euro currency

Incoming visitors from Europe should note that the Euro is not accepted in Bermuda. They should use US dollars. But all Bermuda's banks offer the Euro - € - to all visitors and business executives or representatives heading for Ireland and EU countries of Europe. Avoid using Euro traveler's checks, instead use credit or debit card cards at ATMs of banks in Euro countries.