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By Keith Archibald Forbes (see About Us) exclusively for Bermuda Online
To refer by e-mail to this file use "bermuda-online.org/banking.htm" as your Subject.
There are now four banks, all local or mostly so. They and their regulatory agency all have websites which will be linked to gladly when they reciprocate the link. All registered banks in Bermuda must by law - local, not United Kingdom law - be at least 60% beneficially owned by Bermudians. The actual figure was closer to 85% until early in 2004. 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:
Deposits made with all the Bermuda banks mentioned below are:
Unlike in the United States (where since October 2008 the US Government's independent agency the Federal Deposit Insurance Commission (FDIC) insures deposits of all kinds in all licensed banks up to $250,000 per depositor for all deposits, savings and individual retirement accounts, Bermuda laws do not give any kind of similar protection to Bermuda depositors or checking account users or savers.
No such insurance protection is available in Bermuda
The Bermuda banks are:
Formerly the Bank of Bermuda Limited. Since February 2004 owned 100% by HSBC - for US$1.3 billion. 6 Front Street, Hamilton HM 11 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 - lo longer - it has about 2,150 employees in Bermuda and worldwide. Like the other two banks, it owns its Bermuda real estate.
Opening hours are 9 am to 4:30 pm except Church Street Drive-in which is 9 am to 6 pm on Friday and western and eastern branches which are 9 am to 4 pm.
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.
Formerly
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. 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); and Bank of
Butterfield International (Cayman) Ltd in Grand Cayman; and
Butterfield Fund Services (Canada) Ltd.
of Halifax, Nova Scotia, providing fund accounting and administrative services to
hedge funds and alternative investment vehicles in North America.
43 Victoria Street, Hamilton HM 12. P. O. Box HM 1748, Hamilton HM GX. Corner of Victoria and Parliament Streets. Phone 295-8091. Bermuda's third bank. Incorporated in 1969, then as Bermuda Provident Bank Limited. Its name was changed in 1984. It has about 63 employees. Its largest shareholder is First Curacao International Bank NV, which acquired the bank in May 1993 from Barclay's Bank. It is for international business only. First Curacao International Bank has had hundreds of millions of dollars in assets frozen in 2006 by European authorities. Both banks are owned by Bermuda-based Dutch national Mr. John Deuss.
21-25 Reid Street. P. O. Box HM 1194, Hamilton HM EX. Phone (441) 296-6969. Fax (441) 296-7701. Bermuda's fourth bank. Privately held, earlier Capital G, a deposit company owned by Gibbons Company Ltd of Bermuda. It started taking deposits more than 60 years ago in an older name.
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).
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.
| Appeals Tribunal | Banks & Deposit Companies Act 1999. |
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. But there may be disadvantages too, not the fault of the banks. 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.
Their shares are traded on the Bermuda Stock Exchange.
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.
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.
The new strategy - ask ABCO below on how to obtain it - was unveiled at the Second Annual Bermuda Anti-Money Laundering Conference organized by IPC Ltd of London - held on Bermuda on April 29 to 30, 2003 at the Elbow Beach Hotel. The two-day conference was on "Finance and Non Financial Institutions Caught In The Net." Attendees included the Bermuda Monetary Authority, Government of Bermuda, compliance officers of local bankers and lawyers, members of ABCO mentioned below and the National Anti-Money Laundering Committee, and Assistant District Attorney Deputy Chief of Investigation Division New York County, John Moscow.
Formed in February 1999, ABCO is primarily concerned with raising the profile of compliance and anti-money laundering practice locally. It aims to provide Members with opportunities for networking, consulting, training and sharing of information necessary for supporting their positive roles as compliance professionals. Membership is open to all involved in compliance and anti-money laundering practice (e.g. Compliance and Money Laundering Reporting Officers). ABCO has partnered with the internationally-recognized International Compliance Association to provide relevant training for Bermuda's compliance professionals.
| Laws of Bermuda | Acts, Regulations and Statutory Instruments |
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.
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 in 1983. 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.
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. Incoming visitors from Europe should note that the Euro is not accepted in Bermuda. They should use US dollars.
Last Updated:
October 7, 2008
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