BCB reported a profit of $3.23 million for the six months ended March 31, 2012 equating to fully diluted earnings per share of $0.44. This compares with a profit of $1.35 million ($0.20 per share) for the six months ended March 31, 2011.Total revenue for the period was $10.17 million compared to $5.74 million in the prior year period.

The Bank’s Chairman, Michael Collier, stated that “Our improved earnings reflect solid customer deposits and strong interest earnings on our investments and to a lesser extent our loan portfolios.”

Mr. Collier stated that “The Bank’s profit together with the unrealised growth of our investment portfolio boosted shareholders’ equity to $93.56 million at March 31, 2012 compared with $82.92 million at September 30, 2011.

“Our tier one capital ratio, which is a measure of strength and stability, was 25.52% at period end, significantly higher than general industry standards and a clear indication of the strength of BCB’s balance sheet. Our total capital ratio was 21.66%.”

“The Bank seeks to build value for our shareholders by generating consistent and sustainable earnings while adhering to our conservative risk profile.

“We are therefore pleased with the steady growth in profit levels and the strengthening of the deposit base since the completion of the sale of the Bank two years ago. BCB has become Bermuda’s bank of choice for clients that demand traditional service excellence along with a conservative approach to business.”

The action happened 3:40am on Sunday 8th April 2012 and was recorded on the machine’s CCTV camera system. Police arrested Mr Williams on 12th April after reviewing the footage.

The prosecutor told Senior Magistrate Archie Warner that Mr Williams had gotten a metal bar and had used that to smash the ATM’s screen, rendering the machine useless and causing $15,000 worth of damage as stated by HSBC.

Senior Magistrate Archie Warner asked Mr Williams if he had anything to say and Mr Williams replied: “I am a mental patient. I was really hungry and it took my card.”

Questioned more closely by the Magistrate, Mr Williams admitted that he might have put a Butterfield bankcard into the HSBC machine.

Before sentencing, Duty Counsel Leopold Mills told the Magistrate that Mr Williams had a long history at MAWI and with the Courts.

The Senior Magistrate agreed with Mr Mills’ observation and ordered that Mr Williams should be remanded into custody under Section 33 of the Mental Health Act. Mr Williams was also ordered to re-appear on 16th May so that his case can be disposed of.

Minister Weeks will be at the open house from 3 to 4 p.m. to meet and speak with interested buyers and a representative from the Bank of Butterfield will also be available to discuss financing options and terms and conditions.

A site office is also open daily Monday to Friday from 11 am – 3 pm at Grand Atlantic, Block F ground floor. Minister Weeks said there has been a “good response” to the offering of Grand Atlantic Units for sale with more than 100 persons registering their interest.

Minister Weeks said: “I encourage anyone who is interested in the Grand Atlantic Development to come out on Saturday, March 31st for the Open House where they will be able to view the units, speak to representatives from Butterfield Bank and see firsthand the quality of this development.”

Update 2.30pm: The Ministry said that by the end of day yesterday, 190 people have expressed interest in the Grand Atlantic Condos.

Dutch media sources reported today [Mar. 26] that the 69-year-old banker and oil trader was standing trial in Arnhem along with his sister Tineke in a court hearing which is expected to last at least 18 days.

Multi-millionaire Mr. Deuss [pictured] was arrested in Bermuda in 2006 during an investigation into carousel fraud, a sophisticated swindle which costs European taxpayers billions of pounds a year.

Mr. Deuss, who was then chairman of the Bermuda Commercial Bank [BCB], was detained by police on Bermuda after his disappearance from his luxury home in Smith’s Parish triggered an island-wide manhunt.

He later appeared in court and eventually agreed to be voluntarily extradited to Holland.

The Bermuda court was told Dutch authorities wanted him for questioning on suspicion of money laundering, handling stolen goods and “being in charge of a criminal organisation”.

An international warrant had been issued for Mr Deuss’s arrest after a bank he owned on Curaçao, in the Dutch Antilles, was closed in 2006 during an Anglo-Dutch investigation into carousel fraud.

British Customs officials had discovered that every individual arrested and charged with the fraud in the UK in the previous two years had an account at the First Curaçao International Bank [FCIB].

After raiding its headquarters and freezing its assets, investigators discovered that about 2,500 British citizens suspected of carousel fraud held accounts there.

Mr. Deuss later “temporarily” stepped down as chairman and chief executive of Bermuda Commercial Bank due to the criminal probe.

At the time FCIB, wholly owned by Mr. Deuss, was BCB’s biggest shareholder, with a 47 per cent stake. His sister, Tineke Deuss, was a director of FCIB.

Mr. Deuss, who had a home in Bermuda for 30 years and ran his TransWorld Oil company from the island, was once one of the world’s best-known oil dealers.

He came to prominence in the 1980s when he supplied the South African apartheid regime with oil, defying United Nations embargoes.

Since then he has also traded in Russian oil; in the 1990s, he became president of the Oman Oil Company.

The digest also reported that valance sheets have returned to positive growth.

Total assets rose by 6.0% for the quarter resulting from increases in investment activity — up 38.1% during the last quarter and 42.2% year-on-year — which is mainly funded by increases in demand deposits (up 17.9%).

Although customer deposits increased during the quarter, the funding gap in Bermuda dollars has widened.

The Bermuda dollar loan-to-deposit ratio increased to 149.5% — up from 145.8% in Q3 and 139.7% a year earlier — due to a higher FX share (84.3%) of total deposits (up from 82.9% in Q3 2011) as a result of a surge in US dollar demand deposits (up by 30.1%) and declines in FX time deposits (down 11.2%).

The full report is below, click ‘Fullscreen’ for greater clarity:

Ian Truran, the Bank’s President & Chief Executive Officer, said, “As a result of the successful amalgamation with First Bermuda Group (FBG) and sustainable growth experienced in 2011, our loan book has increased substantially this year to $968 million, up $171 million from $797 million in 2010. Similarly, customer deposit levels remained robust, increasing in excess of 10% year-over-year to $1,207 million in 2011”.

Net interest income (NII) before loan loss provisions increased by $10.5 million, or 28%, to $47.9 million, with FBG contributing $7.2 million in 2011. The increase in NII helped to offset the increase in operating expenses which grew to $48.5 million from $40.8 million.

Mr. Truran stated, “Capital G continues to invest in technology to secure future operational efficiencies and expand the Bank’s services and product offerings.

“It was particularly pleasing to note that the diversification of our businesses, including our increased focus on integrated wealth management and business banking, helped to raise the Bank’s net fee and commission income from $6.2 million in 2010 to $8.5 million in 2011, an increase of $2.3 million, or 38%.”

Mr. Truran continued by saying, “Net Income has remained comparatively flat yearover-year, in large part due to the challenging economic environment still facing us.

“Our 2011 results have been particularly impacted by a continuing decline in residential property prices, affecting our collateral valuations and management’s estimation of loan loss provisions, which we have increased by $5.2 million to $6.7 million in the current year.”

Capital G’s focus continues to be on sustainable growth combined with strategic amalgamations and acquisitions as evidenced over the past few years with KAST Investment Management, Orion and First Bermuda Group. The diversification of revenue, either through the entry into new business lines or by prudent pricing and the generation of new fee revenue has been successful.

“We are very grateful to have such a highly committed workforce and loyal client base and thank both particularly during the recent mergers and acquisitions for their commitment and dedication to delivering the highest levels of service to our new family of clients.”

Mr. David Carrick, the Bank’s new Chief Financial Officer, stated, “Although the Bank continued to operate in a historically low interest rate environment, strict adherence to prudent balance sheet management, as well as the addition of FBG, contributed to an improved net interest margin of 3.68% in 2011, up from 3.50% in 2010.

“Over 98% of our investment portfolio is now in AAA or AA rated bonds and while we had some exposure to Northern European countries at December 31, 2011, subsequent to year-end we disposed of our European corporate investments with immaterial income statement impact.”

Mr. Carrick continued, “While we did add to our loan provisions, for both specific and collective provisions, in anticipation of potential future losses on a number of loans, our traditionally conservative approach to lending continues to prove beneficial and no losses or impairments have been taken on our commercial loan portfolio.

“Total impaired loans are $21 million at the end of 2011, representing 2.15% of our gross loan portfolio, compared to $5.6 million in 2010, which equated to 0.70% of gross loans at that time. In addition, the Bank’s capital ratios remain strong with a Tier 1 ratio of 14.09%, well above the Tier 1 regulatory minimum of 8%, although down from last year’s 16.88% due to the growth in our balance sheet. Similarly, the Bank’s tangible equity ratio increased to 6.87% from 6.75% in the prior year.”

Mr. Truran concluded, “Overall we are very pleased with the Bank’s performance in 2011. The weak economy posed significant challenges, especially in respect of loan portfolio quality and appropriate provision levels. First Bermuda Group operations have been successfully and smoothly integrated with those of the Bank and we now offer banking services at two locations in Hamilton under the Capital G brand.

“We have grown net interest income and fee income substantially this year, further developed our business banking services and more fully integrated our private banking and wealth management solutions. In addition, we continue to support the community through our Giving Back donations fund, emphasizing contributions to social services, youth development and education, including scholarship awards and bursaries for deserving students.”

“While others in the community have been busy crying disaster, doom and gloom, the Government of Bermuda is hard at work coming up with creative solutions for the Housing market,” said Minister Weeks at a press conference this afternoon.

“The Government is very pleased today to announce that in partnership with Butterfield Bank, 100% financing will be offered to qualified first-time home purchasers of units at the Grand Atlantic development.”

“While the Government has appreciated the challenges in the mortgage market, we realize there is still need for innovative and flexible ways for those desirous of owning their own home to successfully achieve that dream.”

Minister Weeks continued on to say, “With this magnificent Grand Atlantic project, the Government has made another significant impact on easing the Housing issues facing residents in the Island of Bermuda.”

The Grand Atlantic Development will comprise of 60 two bedroom/one bathroom homes and 18 three bedroom/two bathroom homes. Prices range from $495,000 for a 2 bedroom home up to $665,000 for an ocean view 3 bedroom unit. Earlier this month, it was reported that none of the units have sold.

Last year conservationist Dr David Wingate warned that the cliffs underneath the Grand Atlantic condos are eroding at the rate of 1 – 2 metres every decade.

The Minister’s full statement follows below:

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Update 4.14pm, Photos from today’s viewing added, click to enlarge:

The SEC alleges that Brian Raymond Callahan of Old Westbury, New York, raised more than $74 million from at least two dozen investors since 2005, promising them their money would be invested in liquid assets.

Instead, Callahan diverted investor money to his brother-in-law’s beach resort project that was facing foreclosure, and in return received unsecured, illiquid promissory notes.

Prosecutors allege Callahan defrauded the Callahan Funds and their investors by commingling and misusing Callahan Fund assets. And Callahan is also accused of engaging in a fraudulent scheme to divert assets from some of his funds to pay investors in his other funds.

Until sometime in 2010, Callahan directed investors to wire their investments to several offshore accounts in the the British Virgin Islands,” reads the indictment against him. “In about 2010, Callahan advised investors to wire their funds to a Bermuda client funds account.

“Callahan then wired assets of the Callahan Funds from the BVI accounts or the
Bermuda Client Funds Account to an escrow account established by his father-in-law, which was established to hold payments from purchasers and subscribers
relating to the real estate project. In the Escrow Account, assets from all of the Callahan Funds were commingled and then sometimes improperly transferred to other investors.:

Callahan also used investor funds to pay other investors and make a down payment on the $3.35 million unit he purchased at his brother-in-law’s real estate project.

According to the SEC’s complaint filed yesterday in federal court in Islip, New York, Callahan operated the five funds through his investment advisory firms Horizon Global Advisors Ltd. and Horizon Global Advisors LLC.

He used the promissory notes to hide his misuse of investor funds. The promissory notes overstated the amount of money diverted to the real estate project.

For instance, in 2011, Callahan received $14.5 million in promissory notes in exchange for only $3.3 million he provided to his brother-in-law. The inflated promissory notes allowed Callahan to overstate the amount of assets he was managing and inflate his management fees by 800 percent or more.

“Callahan misled investors in his funds with false promises, and he enriched himself at their expense when he diverted fund assets for his personal use and pocketed inflated management fees,” said Antonia Chion, Associate Director in the SEC’s Division of Enforcement.

According to the SEC’s complaint, Callahan refused to testify in the SEC’s investigation and recently informed investors about the investigation, but gave false assurances that no laws had been broken. Callahan also misled investors by not disclosing that in 2009, the Financial Regulatory Industry Authority barred him from associating with any FINRA member.

The SEC charges Callahan and his advisory firms with violating federal antifraud laws. The SEC is seeking preliminary and permanent injunctions against Callahan and his firms, return of ill-gotten gains with interest, and financial penalties.

At the SEC’s request, and after a court hearing yesterday, the court granted a temporary restraining order freezing the assets of Callahan and his advisory firms, enjoining them from violating the antifraud provisions, and granting other emergency relief.

The SEC’s investigation has been conducted by Holly Pal, Linda French, Osman Handoo, Ann Rosenfield, Natalie Lentz and Lisa Deitch of the SEC’s Division of Enforcement. The SEC’s litigation is being led by Dean Conway.

The Commission acknowledges the assistance of the British Virgin Islands Financial Services Commission and the Bermuda Monetary Authority.

Year end highlights on “underlying” performance include:

• Underlying consolidated net profit of US$152m for the year ended 31 December 2011, an increase of 3% compared with the prior year.
• Underlying total operating income of US$423m for the year ended 31 December 2011, an increase of 6% compared with the prior year.
• Underlying consolidated total operating expenses of US$231m for the year ended 31 December 2011, an improvement of 4% compared with the prior year.
• Total underlying cost efficiency ratio of 55% for the year ended 31 December 2011, an improvement of five percentage points compared with the prior year.

Highlights on the “as reported” performance include:

• Consolidated net profit of US$152m for the year ended 31 December 2011, a decrease of 38% compared with the prior year.
• Consolidated total operating income of US$428m for the year ended 31 December 2011, a decrease of 27% compared with the prior year.
• Total cost efficiency ratio of 55% for the year ended 31 December 2011, an improvement of two percentage points compared with the prior year.
• Total assets of US$14,881m at 31 December 2011, an increase of 26% compared with the prior year end.
• Total loans and advances to customers at US$3,598m at 31 December 2011, an increase of 11% compared with the prior year end.
•  Total customer accounts increased by US$3,223m or 33% compared with the prior year end.
• During the year ended 31 December 2010, a wholly owned subsidiary, HSBC Insurance (Bermuda) Limited, was sold to an HSBC affiliated entity.
• During the year ended 31 December 2011, wholly owned subsidiaries, HSBC International Trustee Limited and HSBC Insurance Holdings (Bermuda) Limited, were sold to an HSBC affiliated entity and a third party, respectively.
•  Total allowances as a percentage of total loans and advances to customers increased significantly to 1.3% at 31 December 2011, compared to 0.6% for the prior year.
•  Tier 1 capital ratio stable at 33% at 31 December 2011, compared to 31% at prior year end.

Michael Schrum, Chief Financial Officer of HSBC Bermuda, noted: “2011 has been another challenging year for the economy and financial services in Bermuda. Our underlying performance remains stable amid a slow economic recovery. At a time of record low interest rates and prolonged credit turmoil the Bank has achieved solid and sustained success across all businesses.

“The Bank has maintained a strong and significantly growing balance sheet with a focus on building a high quality, liquid investment portfolio, well-secured mortgages and diversified loan portfolio. Loan impairment charges have increased and we are seeing weakening local loan performance, which still remains within cyclical tolerances. The Bank remains well positioned for future growth as we continue our commitment to work with customers during these difficult economic conditions.”

Richard Moseley, Deputy Chief Executive of HSBC Bermuda, said: “We have made good progress in wealth management, having distributed US$75m of structured products to our individual clients who are looking for principal secured opportunities. We have also assisted our Bermuda insurance customers with management of their non-US dollar catastrophe claims by providing value added foreign exchange advice and foreign currency accounts.

“We continue to segment our approach across the businesses, and have seen significant revenue growth in corporate banking relationships as we provide a greater range of banking services through focused relationship management. During this difficult time, we are working ever more closely with our customers to help them navigate the changing market landscape and secure lasting partnerships.”

Philip Butterfield, Chief Executive of HSBC Bermuda, said: “2011 has generally been a resilient year for HSBC Bermuda. The Bank was again recognised by Euromoney as ‘Best Bank in Bermuda 2011’, followed by winning The Banker magazine award as ‘Bank of the Year’ in Bermuda for five consecutive years from 2007-2011.

“In this uncertain environment, these awards and the strength of the HSBC brand reaffirm our values and commitment to achieving service excellence. HSBC Bermuda continues to benefit from being a strategically important part of the HSBC Group, which allows the Bank to offer a world class value proposition to customers, both local and international. We have been able to build on Bermuda’s international connectivity and offer our customers integrated solutions to their financial services needs.

“We do understand that many customers are facing challenging times and I would like to personally thank our customers for their continued support and confidence in the Bank and our staff for their commitment and support to our customers during this difficult period in the economic cycle.

“This focus will ensure that HSBC Bermuda continues to be a bank which people want to do business with in 2012 and for many years to come.”

Butterfield President & CEO Bradford Kopp said, “The Bank generated respectable levels of profit in each fiscal quarter, contributing to net income for the year of $40.5 million.

“Although, by historical standards, that level of annual income is modest for Butterfield, when viewed against the backdrop of ongoing economic dislocation and low interest rates in our key markets, it is a positive achievement.

“Our income was driven by the successful implementation of our strategy to improve operating efficiencies, strengthen credit quality and expand our interest margins.”

Mr. Kopp continued, “We saw notable improvements in the overall performance of our lending business in 2011, even as we experienced increases in delinquencies on personal loans, credit cards and residential mortgages of a magnitude commensurate with general economic difficulties.

“By taking advantage of opportunities in under-served sectors of the UK and Guernsey loan market, and the extension of additional credit facilities to the Government of Bermuda, the Bank grew the loan portfolio during the year, whilst reducing the overall percentage of non-accrual loans on our books.”

Brad Rowse, Butterfield’s Chief Financial Officer, said, “In late 2010, the Bank revised its investment strategy in an effort to improve returns and largely implemented that strategy during 2011. Based on the provision of improved modelling and analytics, we were able to more effectively match the durations of our deposits against investments for improved yield, without taking on excess risk.

“As part of this strategy, the Bank is now holding certain securities—issued primarily by US government agencies—in a Held To Maturity (“HTM”) portfolio. These investments, combined with deposit pricing discipline, resulted in an increase in net interest income of more than 19%.”

The full report is below, click ‘Full Screen’ for greater clarity:

Dark Knight Strategies, which leads a group that has a major shareholding in the bank, made its concerns public in Canada’s “Financial Post” today [Feb. 15].

“Along with a group of institutions including the Carlyle Group, the CIBC became a large shareholder in the bank two years back,” reports the newspaper. “In all, those institutions invested US$550-million with CIBC investing about US$150-million via a combination of common shares and mandatorily convertible preference shares. The shares were priced at US$1.21. At the time it was said neither CIBC nor Carlyle will ‘own more than 22.8% of Butterfield’. Their ownership gave them the right to nominate two directors. The shares closed Tuesday at US$1.14.

“As part of the deal, CIBC provided Butterfield with a commitment letter for a US$500-million letter of credit. Later that commitment was reduced to US$300-million, none of which was drawn. In March 2011 it was cancelled. In its 2010 annual report, the Bank of Butterfield reported that ‘commitment and legal fees to establish a liquidity facility with CIBC’, amounted to US$7.48-million.

Last year Dark Knight wrote to CIBC expressing “serious concerns with regard to the corporate governance, the conduct of the directors, operations and management of Butterfield.”

That letter — a similar version was sent to Carlyle — was sent after the investor group wrote to the the Bank of Butterfield requesting answers to a number of questions.

“We are trying to get their board focused on the investment and on what’s being done,” said Dark Knight. “The board of CIBC has to make a decision on whether they want this to continue or whether they want to actually act the way they speak in all of their material. They are acting as if they own it.”

Mr. Clipper joined the Board of the Bank as a non-executive director in August 2011 and succeeds Mr. Michael Collier, who will remain as Chairman of the BCB Board.

Mr. Clipper, a Bermudian, is Chairman and Managing Director of locally-incorporated Headland Management Ltd, a role he will maintain while assuming this new position. From July 2010 through the end of December 2010, Mr. Clipper was CEO of First Bermuda Group, during which time he oversaw the successful amalgamation of that business with Capital G Bank Ltd.

Mr. Clipper has significant international and local banking experience, locally with the Bank of Bermuda and internationally with Chase in London and Singapore and with Citibank, in London, Edinburgh and Hong Kong.

In his new role, Mr. Clipper will be responsible for managing the businesses of the BCB Group, setting the strategic plans, ensuring the Group companies meet their statutory obligations and maintaining the Group’s vision and values.

He will also be responsible for the Group’s relationships with its external stakeholders, such as the Government and the Bermuda Monetary Authority, trade bodies, the media and the general public. He will report to the Board of Directors.

BCB Chairman, Mr. Michael Collier, said “Jonathan’s track record of over 30 years of experience in the financial services industry will provide an excellent foundation for BCB to expand its wealth management and commercial banking activities. I am delighted to hand over the reins to him and am confident that he will bring great value to our clients.”

BCB Deputy Chairman, Mr. Warren McLeland, said “I have known Jonathan since we were at Chase together in Asia in the 1980’s and warmly welcome him to this new role. I would also like to take this opportunity to thank Michael for his role as Managing Director since the Bank was acquired by Permanent Investments Ltd in April, 2010.

“During his time as Managing Director, the Bank has been re-invigorated, and has been successfully turned around with the latest profit of $2.6 million as at the September 2011 year end. In addition, the bank is in an enviable position of a liquid balance sheet with the majority of assets in cash and near cash, and the substantial remainder in a diversified international bond portfolio.”

Mr. Clipper holds an M.Phil. in Business Administration from Oxford University, which he attended as a Bermuda Rhodes Scholar, and an Honours Degree in Biology from the University of York. He is a Fellow of the Institute of Chartered Secretaries.

From left to right: David Carrick, Stephen Gift and Frank Morisano

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Mr. Morisano has over 25 years of global banking and risk management experience. He joins from Ma Lee Advisory Limited in Hong Kong, an Asian consulting firm, where as a Partner he directed business development, product delivery, and deployed consulting teams at leading financial institutions, insurance companies, and corporations to develop and implement robust risk strategies, liquidity and treasury solutions, and risk management frameworks.

Mr. Morisano was previously General Manager at QNB, a Partner and Financial Services practice leader at PricewaterhouseCoopers Consulting, and a Managing Director at GMAC-RFC. Mr. Morisano has also served at Bank of America and JPMorgan Chase.

Mr. Carrick has extensive leadership experience gained over 20 years in a range of corporate environments in the financial services industry. He joins Capital G after serving the last two years in the role of Corporate Controller, SVP Finance at Butterfield Bank, where he was responsible for the Bank’s financial and regulatory reporting, and insurance programmes.

Mr. Carrick was also involved in the $550 million capital raise in March 2010 and associated subsequent rights offering to existing shareholders in May 2010. Mr. Carrick will assume the role of CFO from Mr. Ralph Kern who has been in the role of CFO for the past 9 years. Mr. Kern will act as Senior Finance Consultant until his retirement in early 2013.

Mr. Carrick previously held the role of Senior Vice President, Chief Accounting Officer, at Scottish Re Group Ltd, where he served as a member of executive management to restructure the company. His prior roles also include that of Director of Finance at Tyco International Ltd., Head of Financial Reporting at the Bank of Bermuda, pre- and post its acquisition by HSBC, and Financial Controller at Bacardi Capital Limited.

Mr. Gift, SVP and Head of Treasury for Capital G Bank Limited has supervised and worked in treasury operations in both North America and Asia dealing in foreign exchange. With more than 20 years of experience in treasury management, he previously served as Head of Trading & Liquidity, Global Markets, at HSBC Bermuda, where he was responsible for the activity of the Global Markets Trading team.

His position involved the management of the Bank’s daily liquidity position, investment management of the Bank’s Treasury Asset Portfolio, and foreign exchange deal execution on behalf of the client sales team.

President and CEO of Capital G Bank, Ian Truran, said, “I am delighted to welcome three significantly experienced financial industry specialists to these critical leadership roles. Their appointment is a positive step in the growth of Capital G. Their proven abilities will further strengthen the executive team in ensuring Capital G‘s preparedness to excel in the banking industry in the years to come.

“I look forward to working with these gentlemen in the execution of our ongoing programme to be the best provider of financial services in Bermuda.”

Since the inception of the annual Holiday Giving Back Programme in 2007, Capital G has committed to matching community donations to the fund by $5,000 each year.

This year, donations from the community together with donations by Capital G staff and funds raised at a pre-Christmas Gibbons Company Charity Shopping Friday totaled more than $9,221.26. The Capital G corporate matching funds brought the total donated to $14,221.26.

Photo left to right: Peter Smith, Vice President, Meals On Wheels; Gladys Madeiros, Volunteer Coordinator, Meals On Wheels; Ian Truran, President & CEO, Capital G Bank Limited and Capital G Trust Limited; Tannika Rodrigues, Administrator, Meals On Wheels, and Donna Amaral, Treasurer, Meals On Wheels.

Since the programme was initiated, the recipients of Capital G’s Christmas charity programme have received donations ranging from $12,000 to over $17,000 per year.

Capital G Bank President and CEO, Ian Truran, said: “Each year, we are reminded of the generosity of Bermuda’s residents in their support of our Holiday Giving Back fundraising drive.

“Despite the challenging times, they donated generously again this year, remembering others who may be elderly or housebound and rely on the assistance of Meals On Wheels for a hot and nutritious lunchtime meal.”

In addition to financial support, Capital G also promotes a “giving back” relationship among its staff and the company’s charitable partners. This has evolved into community involvement projects which saw a group of Capital G staff members assist with meal preparation in the Meals On Wheels kitchen and help deliver meals to the people who needed them.

Mr. Truran said, “We encourage our staff ‘to get involved’ and volunteer for the fundraising projects we undertake for a charity. This helps them to get to know and appreciate the charity we’re supporting, and also gives them a chance to enjoy themselves while they help to raise as much money as possible in support of that charity’s work in the community.”

He added, “Any of us could know someone in the community who might need the support of Meals On Wheels at some point in their life. Our aim with the Holiday Giving Back is that we should develop a real partnership with the charity that can make a difference.”

Capital G’s staff volunteer team helped to prepare and package 170 meals, which included a soup, dessert and a choice of regular, low sodium, diabetic or vegetarian meal.

Following the food prep and the washing-up, each volunteer was assigned to a driver to cover 16 routes throughout the island. Each meal costs $5 to those who can afford to pay, however the cost of Meals on Wheels to prepare and deliver each meal is closer to $14.

With this donation, Capital G, its clients, employees and other charitable partners are able to ensure delivery of more than 1,000 meals.

A spokesperson for the Bank said, “Butterfield advises our customers that we will NEVER ask them for personal information or account details via e-mail or use e-mail to direct them to a website to “update” or “unlock” their online access.

“If customers receive an e-mail requesting that they visit a website to update their account information or unlock their accounts, they should disregard it and delete it; it is fraudulent.”

Based in New York City, he will manage HSBC’s commercial banking operations across North America. He succeeds Mark Watkinson, who became Chief Executive Officer, Malta. In his new role, Mr. Bottomley reports to Alan Keir, Group Managing Director and Global Head of Commercial Banking, and locally to Irene Dorner, Group General Manager, president and CEO, HSBC USA.

Prior to his new role, Bottomley served as HSBC’s Head of Strategy and Planning for the Middle East and North Africa [MENA] region. During his nearly 30-year career with HSBC, Mr. Bottomley has held numerous executive leadership positions, including as the Head of European Strategy, the Head of Commercial Banking in the United Kingdom and the Head of Commercial Finance in Europe. One of Mr. Bottomley’s first executive assignments was in Toronto as an Assistant Vice President with HSBC Bank Canada.

“Today, tremendous opportunity exists for North American businesses to flourish in the international marketplace,” said Irene Dorner. “Steve will lead a growing commercial banking business here, which is at the center of HSBC’s strategy in the region. I am confident Steve’s experience, ability to execute and strong leadership will further our efforts to serve the growing number of small, middle-market and large companies conducting business or considering conducting business internationally.”

With commercial banking operations in 65 markets around the world, including every region of the US, HSBC is one of the world’s leading international business bank and widely recognised as a leading authority and trusted advisor on international trade and finance matters.

“North America accounts for nearly 15 percent of world trade, making it a vital international trade hub and an important regional market for HSBC. In coming years, international trade flows from the region are expected to grow substantially, especially with many emerging economies where HSBC has a long established presence,” Alan Keir said. “Clients in the United States, Canada and Bermuda will be well served by Steve, a leader well versed in all that HSBC has to offer commercial banking clients requiring credit, trade and treasury solutions in current markets they operate or in new international markets where they want to expand their business.”

The Basel III rules form part of the Basel Committee on Banking Supervision’s response to the weaknesses in existing international banking supervisory standards highlighted during the global financial crisis.

The purpose of the BMA’s paper is to make the banking sector aware of the key features of Basel III, to offer preliminary thoughts on its implementation for Bermuda banks and to seek initial feedback from the banks and other stakeholders prior to a planned formal consultation process.

The key features include:

• A revised capital framework; strengthening the quality of regulatory capital; revising minimum capital standards to more accurately reflect risk; and the introduction of an additional leverage standard.
• Further amendments to risk management guidance.
• Expansion of existing market discipline and transparency rules.
• Introduction of an internationally observed regulatory minimum liquidity requirement.

The paper is available on the Authority’s website, www.bma.bm, and the market should submit comments to the BMA by February 29.

Additionally, the BMA has begun consultation with the market on its proposal to establish a Corporate Governance Code for Bermuda’s banks.

During the recent international economic turmoil, poor corporate governance was identified as one of the key factors contributing to banking failures.

One of the Basel Committee’s responses to the situation was to seek to raise the standard of international governance practice through revision of its “Principles for Enhancing Corporate Governance”.

The BMA has sought consistency with the Principles in the development of the Code it is proposing for Bermuda.

The draft Code sets out 13 principles with related guidance and covers the following key areas: board practices; the role of senior management; risk management and internal controls; compensation; complex corporate structures; and disclosure and
transparency.

The draft Code is also available on the BMA’s website. The deadline for market submissions is February 29.

Subject to his election, the Directors intend to appoint Mr. McDonagh to the position of Executive Chairman of the Bank.

Butterfield’s current Chairman, Mr. Robert Mulderig, has decided to retire from the Board at the conclusion of the 2012 AGM as part of the intended orderly Board transition that was disclosed to shareholders last year. Mr. Mulderig has served as a non-executive Director since 1996. He was appointed as Chairman in 2007.

In his role as Executive Chairman, Mr. McDonagh will work closely with Butterfield’s Board and current management team, headed by Mr. Bradford Kopp, President & Chief Executive Officer, to continue to implement the Bank’s strategic objectives, including enhancing the sustainable profitability of the Bank, improving coordination of resources across jurisdictions and enhancing the core businesses of community banking and wealth management.

Mr. McDonagh is a career banker with extensive international experience in consumer finance, retail and commercial banking and wealth management. He began his career with HSBC in London in 1979 and held increasingly senior positions within HSBC in Brunei, Hong Kong, Oman, Japan, the Channel Islands and the UK.

He transferred to the US in 2002 to lead HSBC’s American retail and commercial banking operations. Mr. McDonagh was appointed Chief Operating Officer of HSBC Bank USA, NA in 2004, Chief Operating Officer for HSBC Finance Corporation in 2006, and Chief Executive Officer of HSBC Finance Corporation and Chief Operating Officer of HSBC North America in February 2007.

He was named Chief Executive Officer of HSBC North America Holdings and Group Managing Director, HSBC Holdings plc in 2008.

With effect from 23 January 2012, Mr. McDonagh will be retained as a strategic adviser to the Board. Until his election to the Board, he will familiarise himself with each of the Bank’s businesses and liaise with Mr. Mulderig to effect a seamless transition of the Chairman’s duties.

Mr. Shaun Morris, Managing Partner of the Appleby (Bermuda) law firm, a Director of the Bank and head of Butterfield’s Corporate Governance Committee of the Board, led the recruiting effort, both locally and globally, in conjunction with a leading international search firm.

Mr. Morris said, “Butterfield is fortunate to have a senior international banker with a longstanding reputation for effective leadership joining our organisation. Brendan’s extensive experience in many facets of the banking business, along with his first-hand knowledge of financial services in several jurisdictions, including Guernsey and the United Kingdom, where Butterfield has significant operations, will serve the Bank well going forward.”

Mr. Olivier Sarkozy, Managing Director and Head of the Global Financial Services group at private equity firm, The Carlyle Group, which was one of the leading participants in the $420 million recapitalisation of Butterfield in 2010, welcomed Mr. McDonagh’s appointment, saying, “From a shareholder’s perspective, Carlyle is extremely pleased with Butterfield’s choice for its future Executive Chairman. Brendan has the experience and market knowledge needed to lead the continued turnaround at the Bank.”

Speaking on behalf of the Board, Mr. Morris thanked Mr. Mulderig for his contributions to Butterfield, saying, “Rob was one of the architects of the recapitalisation of Butterfield, and his presence as Chairman was one of the key factors in the success of that effort. It is under Rob’s leadership that Butterfield was able to restructure and divest itself of problematic assets and return to profitability. We thank him for his many years of service to the organisation.”

Fitch’s ratings continue to reflect BCB’s comfortable liquidity and strong capital position. Conversely, they remain constrained by the bank’s small size and limited diversity.

The Negative Outlook is driven by concerns regarding concentration risks principally in BCB’s investment portfolio.

“Other concerns include relatively high individual exposures as well as concentrations in Europe and the financial institution sector,” said the ratings agency. “While these risks still appear manageable in Fitch’s view, they also potentially subject BCB to higher relative risk versus prior years.

“Given BCB’s business focus on various private banking and corporate services, total loans remain a modest portion of total assets.”

After a change in ownership in mid-2010, BCB resumed normalised operations and since that time, BCB has posted considerable customer deposit growth, improved level of overall customer activity and higher core profitability.

“That said, work still needs to be done to build up BCB’s revenue stream and core earnings,” said Fitch. “The recent acquisitions of Paragon Trust and Charter Corporate Services have the potential to significantly increase fee income in the coming year.”

Fitch may downgrade BCB if concentration risks in the investment portfolio remain at current levels or increase.

Other potential rating drivers include: any considerable reduction in liquidity or capital ratios, significant increases in credit or market risks and/or any acquisition which results in a shift towards a riskier business mix. Any upside to ratings is capped by BCB’s limited scale of operations.

Established in 1969, BCB focuses on corporate and private banking services including deposits, cash management, trust, fund administration and corporate services. BCB has no plans to significantly change its business mix.

Fitch has affirmed the following ratings with a Negative Rating Outlook:

Bermuda Commercial Bank

• Long-term IDR at ‘BBB-’;
• Short-term IDR at `F3′;
• Viability Rating at ‘bbb-’
• Individual at `C’;
• Support at `5′;
• Support Floor at `NF’.

Based in New York, Ms Maloof will be responsible for developing and leading the regional strategy for the insurance sector.

Prior to joining HSBC Bermuda in 2005, Ms Maloof served as First Vice President with Mellon Financial Corporation’s insurance banking and loan products group, covering property and casualty, reinsurance and life insurance companies in the US, Europe and Bermuda.

Commenting on her appointment, Ms Maloof said; “I am delighted to join the team at Barclays, and look forward to leveraging the strength of the bank’s global platform and brand to deliver superior financial solutions to the North American insurance sector.”

She will report into Carl Boulton, Head of Insurance at Barclays Corporate, who commented; “Karla’s appointment is a significant step forward in our global strategy to provide best in class coverage and solutions for our clients around the world and follows recent hires to strengthen the team in Western Europe.”

Brad Kopp, Butterfield’s President & Chief Executive Officer, said, “We are pleased that S&P has affirmed our short-term and long-term deposit ratings in its latest update. That report highlights the strengths of the Bank’s balance sheet and views favourably the Bank’s risk-averse strategy.

“During a time when we have seen some of the largest banks in the world downgraded on increasingly stringent ratings criteria, we believe S&P’s report helps validate that we are continuing to do the right things to strengthen the franchise and manage customer relationships during times of economic uncertainty.”

In affirming the Bank’s ratings, S&P cited Butterfield’s strong capital and earnings and above-average funding, relative to other banks in Bermuda.

At 30 September 2011, Butterfield’s total capital ratio was 22.5%, its tier 1 capital ratio was 16.8% and its tangible common equity ratio stood at 6.5%. Butterfield reported profits of $31.4 million for the first nine months of 2011.

Commenting on the strength of Butterfield’s balance sheet, the S&P update noted that Butterfield’s “loan performance has improved in recent quarters, notably in the hospitality loan portfolio, despite a weakening local economy.”

S&P also cited Butterfield’s maintenance of a large proportion of core deposits, which more than fully funds the loan portfolio, and highly liquid investment securities as factors in assessing the Bank as having “above average” funding and “adequate” liquidity relative to the average bank in Bermuda.

S&P also commented on the stability of Butterfield’s deposit base: “Gathered largely through its community banking businesses, customer deposits constitute the majority of the bank’s funding, which we view as stable and with low customer concentration.”

The 13 December update notes that S&P expects Butterfield to remain profitable in 2012 and 2013, based on its forecasts of low loan loss provisions, gradually improving net interest margins, growth in fee-based revenue and additional expense reductions.

Ian Truran, President & CEO of Capital G Bank Ltd & Capital G Trust Ltd. said: “Capital G’s donation to the Salvation Army is keeping with the company’s 2011 ‘giving back’ mandate to support charities that focus on education, the youth and families.”

Photo below: James Gibbons, Chairman, Capital G Bank Limited, left, and Ian Truran, President & CEO, Capital G Bank Limited, right, donate a cheque for $20,000 to The Salvation Army’s Divisional Commander, Major Shawn Critch:

Capital G has supported The Salvation Army for more than five years through financial and in-kind donations, but this larger donation is very special this year.

Mr. Truran said: “Bermuda is experiencing hard times. Real unemployment is being felt across a broad section of people and they are experiencing lower wages and reduced working hours. This affects some household’s ability to balance their usual expenses, which includes purchasing groceries.

“In celebration of Capital G’s 10-year anniversary in October, we donated fifty $500 Lindo’s grocery vouchers. The Salvation Army was another vehicle through which Capital G felt it necessary to assist a group who has an immediate connection to the hardship of these economic realities.”

Major Shawn Critch, Divisional Commander of The Salvation Army, said he was grateful to Capital G Bank for demonstrating their support and contributing to their rising fundraising target.

The Salvation Army is aiming to meet its highest-ever objective of $1 million in fund raising. In Bermuda, The Salvation Army provides a daily soup run in Hamilton for the homeless via their mobile van service and operates the Harbour Light facility on King Street as well as the North Street Shelter.

A Butterfield spokesperson said, “We confirm that we have offered early retirement to 46 employees in Bermuda aged 60 to 65. Each employee’s decision whether to accept the retirement package being offered is voluntary and entirely his or her own.

“If an individual employee chooses not to accept early retirement, it will have no bearing on his or her current role or responsibilities within Butterfield, or future opportunities he or she may wish to pursue within Butterfield.”

Richard Moseley, Deputy CEO, will be appointed CEO effective 10 May, 2012 following Mr. Butterfield’s retirement. Mr. Mosley will have been with the bank for almost three years and the HSBC Group for 32 years.

Mr. Butterfield [pictured] was appointed Chief Executive Officer of HSBC Bermuda in February 2004. He is responsible for all lines of business within the bank and chairs the bank’s executive and senior management committees.

Prior to this he held the position of Chief Operating Officer with responsibility for the direction and oversight globally of Operations, Systems, Human Resources, Audit, Compliance, Legal Affairs and Program Management Office. Mr. Butterfield is a member of the Bank’s Executive Management Committee.

Mr. Butterfield joined the bank in June 2000 as Chief Administration Officer. Before joining the bank, he held a number of senior positions with Citibank, which he joined in 1972 entering the Bank’s Management Training Programme. His experience includes Private Banking, Corporate Banking, Operations and Technology, Human Resources.

He is chairman of the Bermuda Hospitals Charitable Trust, a member of the steering committee for Bermuda First, president of Bermuda Health Foundation, chairman of the Advisory Committee for the Bermuda Environmental Alliance, chairman of the Victor Scott School Alumni Association, a board member of Johns Hopkins Medicine and the American Classical Orchestra.

His retirement was announced by HSBC chairman John Campbell, who simultaneously said he did not intend to stand for reelection at the bank’s annual general meeting to be held on 10 May, 2012.

Chairman for the last seven years, Mr. Campbell has served on the bank’s board for 25 years.

Mr. Campbell also said board member Dennis Tucker was retiring after 17 years and his place will be filled by Brian Robertson, Chief Executive, HSBC Bank, plc and an HSBC Group Managing Director effective January 1, 2012.

“Our conservative approach to banking, along with our focus on service excellence, has shown results in stronger business and improved operating results,” said Mr. Collier. “The bank’s balance sheet, capital position and profitability continue to grow; driven by new deposits and strong increases in interest income.”

Interest income increased to $11.40 million from $4.15 million in 2010. This increase was driven by the reallocation of a portion of the bank’s balance sheet out of cash products and into a diversified portfolio of higher yielding securities.

The strong results of the bank are reflected in the 2011 financial performance highlights;

• Underlying profit for the year was $2.60 million, up from $1.18 million last year
• Total assets increased by $122.32 million to $531.98 million ($409.66 million in
• 2010)
• Capital position improved to $82.92 million from $74.95 million in 2010
• Total capital ratio of 27.08% was up from 24.66% one year ago
• Customer deposits at September 30, 2011 were $443.19 million compared to
• $323.61 million at the prior year end, an increase of $119.58 million or 37.0%
• Industry leading liquidity position – short term cash representing over 50% of total
• assets
• One-time gain of $10.01 million on investment in West Hamilton Holdings Limited
• Year-end dividend of $0.10 per share approved giving total dividends for the year $0.20 per share.

This reallocation commenced in the second half of 2010 and the bank benefited from a full year of interest income in fiscal 2011. The bank also recorded increased interest income on its small but growing loan portfolio.

Interest expense increased to $1.86 million compared to $0.39 million a year earlier.

This increase reflects the almost doubling of our customer term deposit balances along with the competitive deposit interest rates now being offered by the bank.

In addition to the increased underlying operating profit the bank also recorded a onetime gain of $10.01 million on its investment in West Hamilton Holdings Limited [WHH].

During the year the bank purchased 40.8 percent of WHH. As part of the acquisition process the bank performed a fair value assessment of its investment resulting in a large premium over cost.

The increase related primarily to the valuation of WHH’s land and property.

The bank realised gains of $4.45 million following the sale of financial investments during the year. This compares to gains of $3.89 million in 2010. These gains were somewhat offset by impairment losses of $2.49 million on the bank’s investment portfolio. These impairment loss levels are consistent with the bank’s internal loss expectations.

The bank incurred hedging costs of $2.42 million in relation to the bank’s investment portfolio. This compares to a net hedging gain of $0.16 million in 2010. These costs, primarily foreign exchange and equity index hedging, reduce the risk associated with foreign currency and market price fluctuations.

Total expenses increased by 8.4 percent from $9.25 million to $10.03 million. This increase was driven by a $0.82 million increase in payroll costs following the expansion and strengthening of its professional employee base as the bank’s business grows.

Additionally,investment advisory fees and business development costs increased by $0.49 million and $0.36 million respectively following the growth of our investment portfolio and our increased marketing activities. 2010 expenses also included a non recurring sale process advisory fee of $1.00 million.

During the year ended September 30, 2011, the bank recorded a $7.61 million unrealised loss within other comprehensive income compared to a loss of $1.86 million for 2010. This loss stemmed from a negative mark to market revaluation of the bank’s available-for-sale financial investment portfolio.

It is management’s judgment that such losses will reverse over time and ultimately will add value to the bank. Indeed, in the month following our September 2011 year end valuations, this loss was almost entirely eliminated.

The board of directors has resolved that a semi-annual dividend of $0.10 per share will be paid to shareholders of record as of November 30, 2011. An interim dividend also of $0.10 per share was paid in May 2011.

The board intends to adopt a progressive dividend policy in line with the bank’s earnings. At September 30, 2011 the bank’s stock traded at $10.75, a discount of 8.6 percent to the book value of $11.76 per share.

The bank’s capital position improved from $74.95 million one year ago to $82.92 million
at September 30, 2011. This increase resulted from a number of items:

• The receipt of $4.32 million following the exercise of shareholder options
• Retained profit for the year increased by $11.34 million, boosted by the $10.01
• million gain on the Bank’s investment in WHH
• A net decrease in available-for-sale and held-to-maturity investment reserves of
• $7.61 million due to unrealised mark to market losses on the Bank’s investment
• portfolios

As a result of these net capital increases, the bank’s regulatory capital ratio strengthened to 27.08 percent at September 30, 2011 compared with 24.66 percent one year ago.

The bank’s risk weighted assets remained at similar levels to the prior year.

Mr. Collier stated that he “was very pleased with the bank’s strong capital position. The bank’s capital ratio of 27.08 percent remains more than double the Bank of International Settlements’ industry target of 12.0 percent and is also substantially ahead of proposed Basel III capital levels.

“Last year I stated that we anticipated a slight reduction in the bank’s capital adequacy ratio as we expanded our investment program. I am therefore very satisfied that capital ratios have in fact improved over a period where our balance sheet size and profit levels have also grown.

“The bank’s increasing financial strength has enabled it to take advantage of strategic opportunities, including our recent acquisition of Paragon Trust Limited and Charter Corporate Services and our investment in WHH.”

Mr. Collier continued “despite the many changes occurring we have preserved our highly liquid balance sheet and low risk profile. At the end of 2011, we had approximately 50 percent of our balance sheet in highly rated, short-term interbank deposits. We are not aware of any other bank holding such a strong liquidity position.”

Total deposits at September 30, 2011 were $443.19 million compared to $323.61 million at the prior year end, an increase of $119.58 million or 37.0 percent.

Furthermore, this increase principally comprised more stable long term deposits. This category increased from $98.02 million last year to $183.88 million at September 30, 2011.

Mr. Collier stated “as a result of the bank’s new direction and product offerings, improved profitability and revised investment strategy; we have seen our deposit levels grow strongly over the course of the year.

“We offer competitive deposit interest rates and a fresh approach to banking – together this has combined to form a very valuable new option for local and international companies. The result has been a broadening of our deposit base as we increased our customer numbers and also saw a strengthening of existing customers deposit levels.”

Mirroring the increase in customer deposits, total assets increased by $122.32 million to $531.98 million at September 30, 2011 from $409.66 million at September 30, 2010.

The bank maintained its strong liquidity position with short term cash and cash equivalents making up $273.29 million or 51.4 percent of this balance.

The bank’s financial investment portfolio increased to $191.99 million from $82.41 million one year ago.

Mr. Collier stated “over the course of the year we have developed our investment portfolio in line with the increase in our customer deposit base. Our professionally managed portfolio of securities provides a high level of asset diversification and generates a stable interest income stream for the bank.

“We now also classify a large portion of our portfolio as held-to-maturity to better reflect the stability and interest income function of these investments. We have designed our portfolio to provide a consistent long-term stream of interest revenue and our balance sheet classification now reflects this.”

The bank’s loans and advances portfolio was $35.34 million at September 30, 2011 up from $9.85 million in 2010. The bank is not yet active in the credit market, but we have provided a small number of loan facilities to high quality counterparties.

BCB anticipates that both the global and local business environment will continue to be challenging for the foreseeable future; indeed it is possible that economic conditions may worsen further before there is any material improvement in economic activity.

Given this outlook and following the strategic meetings held during the year, the board and management team have mapped out a clear strategy going forward.

Some of these initiatives are detailed below.

 To strengthen the institutional services offered by the Bank, a strategic interest was taken in Westhouse Holdings PLC (“Westhouse”). Quoted on the London Stock Exchange and listed and located in London, Westhouse is an integrated corporate finance and broking house serving small to mid-cap companies. The business focuses on providing specialist corporate finance advice together with excellent research and trade execution through its institutional sales, sales trading and market making teams. Through this strategic interest BCB now offers a broader set of services to its fund and corporate clients including UK listings, capital raising, and market making.
 BCB will continue to expand its product line by offering bespoke financial solutions to private wealth and institutional clients. These services will complement the Bank’s existing business units, including asset and investment management, tailored investment funds for institutional and pension firms, custody and trusts.
 BCB will selectively increase market share locally and will continue to monitor new global opportunities as the bank moves forward.  Capital will be preserved initially by ensuring that we do not make lending decisions that BCB may later regret if economic conditions deteriorate further and instead we will focus the strategy on customers who are asset orientated and complement the bank’s suite of products.
 BCB has added corporate finance to its list of services and successfully underwrote the rights issue for WHH.

Immediately following the bank’s September 30, 2011 year end, BCB completed its acquisition of Paragon Trust Limited and Charter Corporate Services by way of amalgamation. The bank also acquired Trinity Hall, a building on Cedar Avenue, which will become the centre for BCB’s private wealth services.

This transaction expands the bank’s business platform significantly, adding to their team of legal and trust professionals, as well as offering a wider scope of corporate services.

Mr. Collier noted that Eric Stobart who acted as the chair of the Audit Committee had stepped down from the Board and was replaced by Mr. Jonathan Clipper.

“We thank Eric for his tremendous contribution to the Board and to the Bank’s governance programmes,” he said. “Jonathan has already contributed to our audit program and we are pleased that he has joined us.”

The board is overseeing the evolution and implementation of a revitalized and dynamic corporate strategy as well as the implementation of a number of internal initiatives to meet the challenges and opportunities of 2011 and the future. These initiatives include a reorganisation of the bank’s governance structure and an external review of risk management structures. These initiatives continue the bank’s traditional conservative, risk-sensitive approach to its business.

Mr. Collier stated that “The core of BCB’s success lies in the strength of its team. BCB has been recruiting new professionals as our business expands. We have added expertise in accounting, asset management, operations and private banking.

“We now have a team of lawyers who can advise our clients on trusts, estates, wealth preservation, trademarks, incorporations, and corporate structures.”

Bermuda Commercial Bank Bermuda Commercial Bank Limited [BCB] is one of Bermuda’s four licensed banks, established in 1969 and regulated by the Bermuda Monetary Authority.

Bermuda Commercial Bank is Bermuda’s only bank focused purely on corporate and private wealth clients, offering a range of bespoke financial solutions.

A spokesperson said, “The Capital G Bank branch at 19 Reid Street will continue to offer the full suite of Capital G Bank retail banking services which encompass Teller transactions and Savings and Deposit services, Mortgages and Lending, Business Banking, Private Banking and integrated Wealth Management with Investments and Trust.

“As a result of the amalgamation and the transfer of assets from FBG, Capital G will become Bermuda’s largest privately-held full-service bank and deposit-taking company with combined deposits in excess of $1.24 billion, a loan portfolio of $970 million and a team of more than 200 employees.”

Pictured at the new branch, from left to right: Douglas C. Selley, Capital G Bank Limited; Coralita Hartherley, Capital G Bank Limited Supervisor of Teller Operations, Branch Banking,; Ian Truran, President & CEO, Capital G Bank Limited and Capital G Trust Limited; Angela Brangman, Capital G Bank Limited, Senior Vice President, Service Delivery, Branch Banking, and Michael Veale, Capital G Bank Limited, Senior Vice President, Personal and Commercial Banking, Capital G Bank Limited.

Ian Truran, President and CEO of Capital G Bank Limited and Capital G Trust Limited said, “We are proud to mark the opening of our second Capital G branch. Coinciding with our 10th Year Anniversary, this is a clear indication of the growth and development of Capital G as a full-service bank for Bermuda.”

Mr. Truran said, “We look forward to continuing to evolve as a full-service bank to support the needs of the community through continued growth and the introduction of products and services that meet the needs of consumers in Bermuda. We welcome all of our clients to each of the respective locations and are excited to be able to provide banking products and services to former FBG clients.”

Former FBG clients will have access to the full suite of Capital G’s Banking and Wealth Management products and services including Trust and Estate Management, and expanded Card Services that include Debit and Credit Cards.

In addition, they will gain access to Business Banking products and services, e-Banking, BSX services, a centralized Lending Centre, a centralized Call Centre, and access to teller services and financial services at both Branch locations with a dedicated teller line at the 19 Reid Street Branch.

They will also be able to continue banking with their same Relationship Managers and Tellers, using the same account numbers and mortgage and loan payment schedule, subject to the terms and conditions of their individual loan agreement.

Capital G clients gain the advantage of access to enhanced retail brokerage services that Capital G is now able to offer as result of the acquisition, in addition to access to Teller and Financial Services at the two Branch locations.

Mr. Truran said, “Our team has done a tremendous job throughout the integration process and I commend them for the technical works that have taken place to prepare for this next step in our continued journey to be Bermuda’s best full-service bank.

“As we now welcome FBG clients into the Capital G family, we would like to express our appreciation for the loyalty and support shown by all of our customers that has fueled our growth. Our aim is to establish lifelong relationships with our customers.

“We look forward to continued successful growth as we further develop our customer base and product range through investments in technology, acquisitions and our ongoing commitment to the community.”

Although the economic recession has been difficult for both countries, recent Business Bermuda economic analyses by US consultancy firm Albright Stonebridge Group shows that Bermuda’s economic relationship with the United States strengthened rather than weakened in the last three years.

In all, Bermudian international service and multinational holding companies sustained 310,000 US jobs in 2010. according to official US government economic data.

The United States exported $10 billion in US goods and services on average to Bermuda, and in turn, Bermuda exported about $23 billion annually to the US economy including as much as $12 billion annually in recovered US insured property losses.

Bermuda’s relationship with the United States did weaken in some sectors like providing investment funds, tourism, and shipping services during the recession. By 2010, growth returned to these accounts as the first signs of bilateral recovery of flows of trade.

“Building its economic partnership with the United States, by 2010, Bermuda, for the first time ever, was the most important international provider of insurance services to the United States,” concluded Albright Stonebridge Group executive vice-president Dr. Charles Ludolph in his report, titled “US-Bermuda Economic Relations: Economic Impact Study 2011.”

The report was officially released by Business Bermuda in October.

“This preeminence is likely attributable to a host of factors that reflect business decisions on how to originate reinsurance and insurance services in a global economy,” said Dr. Ludolph. “That is, while Bermuda rose in its relative standing as a trading and investment partner with the United States in 2010, this mostly proves that financial companies doing business in the United States continued to find their Bermuda partnership strong.

“Bermuda also showed increased significance in terms of flows of trade with the United States in research, development and testing services, and banking and investment services.”

US-Bermuda trade in these two sectors grew by $4 billion in the last two years alone, said the report. In 2010, Bermuda became the fifth most important us export market for banking and investment services and the 12th most important destination in the world for US testing services.
”
Again, there are many reasons possible why Bermuda advanced relative service markets like London, Dublin, Zurich, and Munich, but the more important fact is that Bermuda has sustained its strong economic relationship with the United States relative to the rest of the world in the last ten years,” said Dr. Ludolph

In addition to the strong bilateral economic relationship, the data shows that Bermuda remains a key investment destination in the world economy. Bermuda’s international businesses from insurance to semiconductors have investment in the United States that generates more than $40 billion in product annually.

“This is a key generator of employment and taxes for the US economy,” said Dr. Ludolph. “The surprisingly large flows in Research & Development and testing services with the United States as reported above reflects the investment positions of numerous us and Chinese semiconductor and video game equipment manufacturing companies that chose Bermuda as their corporate domicile.

“Companies like Chipmos, Freescale, Marvell, AOSL, and Contel domiciled in Bermuda as part of a global pattern of manufacturing in China and design and sales in California, Texas and Arizona.

“Bermuda now imports more than $3 billion of computer chip testing services from the United States that are then translated into computer chip manufacturing throughout Asia.”

The Business Bermuda economic impact study demonstrates the continuing strength and dynamism of the Bermuda-United States economic relationship, said the organisation.

“It shows that Bermuda provides a market and investment community that strengthens the United States’ economy and the livelihood of its workers and citizens, even throughout these challenging economic times,” said a Business Bermuda spokesman.

CEO of Business Bermuda Cheryl Packwood [pictured at top] said of Dr. Ludolph’s economic analysis: “His comment, ‘It shows that Bermuda provides a market and an investment community that strengthens the United States economy and the livelihood of its workers and citizens even throughout these challenging economic times’ bodes well for continuing our strong relationship with the United States.

“Such research is vital to the Bermuda Government’s lobbying in the United States and provides concrete statistics for the world to understand the importance of our economic relationship to the United States and other major jurisdictions.”

Business Bermuda works with Bermuda-resident companies and the Bermuda Government to develop and promote Bermuda internationally as the jurisdiction of choice for international business.

Business Bermuda today [Nov.9] launched a video to promote the new edition of “Nexus” — its quarterly on-line magazine covering development’s in the Bermuda off-shore sector.

In her introduction, Business Bermuda CEO Cheryl Packwood [pictured] said the island continues to make considerable strides in its efforts to position itself as the domicile of choice for international business.

“This issue of ‘Nexus’ includes a brief overview by Dr. Charles Ludolph, senior vice president of the Albright-Stonebridge group, who completed the latest US/Bermuda economic Impact survey,” she said. “His comment, ‘It shows that Bermuda provides a market and an investment community that strengthens the United States economy and the livelihood of its workers and citizens even throughout these challenging economic times’ bodes well for continuing our strong relationship with the United States.

“Such research is vital to the Bermuda Government’s lobbying in the United States and provides concrete statistics for the world to understand the importance of our economic relationship to the United States and other major jurisdictions.”

Business Bermuda is an organisation of Bermuda-resident service providers and international businesses which provide quality banking, insurance, reinsurance, legal, accounting, financial, infrastructure, e-business, trust and management services, and products.

The organisation works with Bermuda’s international business industry and Government to develop and promote Bermuda as one of the world’s foremost centers for international business.

Business Bermuda’s Latest Edition Of “Nexus”

“We have reviewed the banking sector of Bermuda [AA/Stable/A-1+] under our updated BICRA methodology,” said the American ratings agency. “Our criteria define the BICRA framework as one ‘designed to evaluate and compare global banking systems’.

A BICRA analysis for a country covers rated and unrated financial institutions that take deposits, extend credit, or engage in both activities. A BICRA is scored on a scale from group ’1′ — the lowest risk — to group ’10′ — the highest risk). Other countries in BICRA group ’3′ are Korea, Chile, the UK, and the US.

“Our economic risk score of ’3′ reflects our opinion that Bermuda has an ‘intermediate risk’ profile in terms of ‘economic resilience’ and ‘economic imbalances’, and a ‘low risk’ profile in terms of ‘credit risk in the economy’ as our criteria defines those terms.”

Standard & Poors said while Bermuda ranks among the world’s highest income economies on a per capita basis, the island’s “weak economic diversification” and “high dependence on the international financial sector” along with some upscale tourism drive its assessment of “economic resilience” as “intermediate risk.”

The Bermuda currency’s long-standing fixed exchange rate at parity with the US dollar offers a stable bulwark for its important finance and tourism sectors, but effectively “relinquishes monetary control, as in many other small international financial centres.”

Year-to-date net income for the nine months ended 30 September 2011 was $31.4 million as compared to a year-to-date net loss of $194.8 million for the period ended 30 September 2010.

Cash earnings — before the amortisation of intangibles — during the period totalled $35.6 million compared to a loss of $190.5 million for the prior year. Year-to-date earnings per share totalled $0.03 on a fully diluted basis, versus a $0.47 year-to-date loss per share for the period ended 30 September 2010.

Bradford Kopp, Butterfield’s president and CEO, said, “The continuing progress across major profit drivers in our business: net interest margin, expense control and credit quality drives our results this quarter and underscores the progress the bank has made in turning its operations around in the wake of its recapitalisation.

“We have now delivered three straight quarters of profitability and our on-going initiatives give us comfort that both revenues and expenses will improve in the quarters to come.”

Mr. Kopp continued, “Credit quality has trended positively and we have significantly reduced exposures to continental Europe, with no direct sovereign debt and exposure to the banking sector limited to deposits or government-guaranteed notes. In addition to reduced risk, our balance sheet now boasts capital and liquidity ratios that are amongst the highest in the industry.”

Butterfield’s net interest margin improved to 2.46 percent in the third quarter of 2011, up from 2.02 percent during the like quarter a year ago; the increase derived principally from disciplined deposit pricing and allocation of investments to longer duration securities.

This improvement was offset by lower income on decreased transaction volumes and lower assets under management and administration.

Non-interest expenses of $73.9 million were down slightly versus the third quarter of 2010, despite a number of non-recurring items in Q3 2011. The efficiency ratio improved significantly to 82.3 percent from 92.1 percent at the end of Q3 2010.

Brad Rowse, Chief Financial Officer, said, “We have de-risked the balance sheet, instituted improved management of interest rate risk to improve net interest margin while staying with simple, lower risk investments, developed good lending opportunities and will soon implement our new core banking system in Bermuda.”

“With this strong progress, we are now well positioned to focus on our efficiency. We have made good progress, improving the efficiency ratio by nearly ten percent over last year. However, we have more work to do to manage our operating costs. In particular, we are focused on controlling expenses by refining processes and improving coordination of functional support across jurisdictional lines.”

“Our goal is to further improve our efficiency ratio to a level that is more consistent with industry standards while maintaining our dedication to risk management and a high level of customer service.”

Between 30 September 2010 and 30 September 2011, the Bank reduced headcount by 128 across all jurisdictions, leading to a net annualised reduction in salaries and benefits (net of provision for incentives and employment services) of $4.0 million [comparing the final month of the quarter to the year-ago period].

In early 2010, Butterfield suffered from large charges associated with its portfolio of structured securities. Consequently, a major restructuring took place including the issuance of $550 million of new equity and the sale of the bulk of the structured securities portfolio.

The recapitalisation was led by the Carlyle Group and the Canadian Imperial Bank of Commerce. Currently, CIBC and the Carlyle Group are the largest shareholders with ownership of 18.8 percent and 17.4 percent, respectively.

Post recapitalisation, key management changes were made including CEO, chief financial officer and chief risk officer combined with the addition of new board members with considerable banking expertise.