Banks In Bermuda

Last Updated :

-

Blog Author :

Sayantan Mukhopadhyay

Edited by :

Pallabi Banerjee

Reviewed by :

Dheeraj Vaidya, CFA, FRM

Table Of Contents

arrow

What Are Banks In Bermuda?

Situated in the heart of the North Atlantic Ocean, Bermuda is a territory of the British island. Bermuda’s economy has been primarily based on light manufacturing and tourism industries. But, in the last few years, Bermuda has been attracting a lot of international exposure.

Banks in_Bermuda

As a result, it is gradually becoming a popular global business destination. The banking system of Bermuda is not as progressive as one wants to think. But things have been changing, and the banks in Bermuda have been performing well as per the last report received in June 2017. The consolidated banking assets of Bermuda as per the statistics of 2016 are $22,700 million. And the deposit guarantee is $25,000.

Table of contents

Banks In Bermuda Explained

Banks in Bermuda is a very interesting topic because of the famous banks situated in it. These banking institutions provide their valuable services to both domestic and international clients. They have become famous due to the exceptional service and a wide variety of financial products provide to clients, which are often customized to suit their needs.

The banking sector operating in the Bermuda region is well known for its stable and secured financial systems. Customers have the least amount of worry regarding information and financial data leakage, credit and liquidity risk, money laundering, etc. This is very important to maintain a stable banking system in a country because it creates a sense of trust and faith from the customers and instigate them to invest more, leading to better utilization of banking services and circulation of money in the economy.

The above is an essential element for the overall development of the country. The banking sector in Bermuda offers such a secure atmosphere. However, due to the ever-changing landscape in the banking sector at a global level, there have been a number of changes in the island country’s banking system too. There has also been a change in the rules, regulations and type of services rendered by them. Therefore, in case any investor of customer wants to take the services of these banks, it is necessary to get updated information regarding them as given.

Structure

Now let us dive deeper into the structure of the financial system of the country.

The peculiar thing about Bermuda is there are only four banks in Bermuda. So even if Bermuda is called an offshore international center of business and insurance, we cannot call it an international banking center.

Many international banks get the allowance to register in offshore locations as banks, and these international banks have no issues operating in these countries. However, in Bermuda, things are much different and strange. Bermuda does not allow these international banks to get registered and work.

This approach reduced the whole banking sector in Bermuda by $1.49 billion during the last year.

List Of Top 4 Banks

In this section we will understand in detail about the top 4 banks operating in the region, their history, value of financial assets they manage, each of their operating procedures, how they have grown over the years and successfully established themselves in the market in a very healthy competition with each other.

  1. Butterfield Bank
  2. HSBC Bank of Bermuda Ltd.
  3. Clarien Bank Limited
  4. Bermuda Commercial Bank Ltd. (BCB)

Let us look at these banks as per the size of the assets acquired by them: -

#1. Butterfield Bank:

 Butterfield, the biggest bank in Bermuda, has acquired around $11.1 billion in total assets.  It has also captured around 38% of the local banking market. Like any other local bank charges its customers a monthly fee for checking accounts. Till the end of 2017, the bank has a target of reaching a 60% efficiency ratio because it has missed its mark of achieving a similar efficiency ratio from March to June 2017.

During these three months, the bank’s non-net interest expenses were $75.3 million, around $9.5 million more than the previous year. Even though Butterfield bank has a reputation of about 160 years, 2017 is a new era for them because, in 2017, they put behind the subprime mortgage crisis of the US and bent them down to their knees for a long time. As of February 2017, Butterfield bank has generated over $115.9 million as profits.

That is great news because the profits of 2017 have been almost $38.2 million more than 2016’s profits. Another noteworthy thing that we should mention is Butterfield’s huge shareholders’ list, including some prominent names on Wall Street. It is the sweet fruit of the bank's stock exchange for public trading and investment. This allows a private company to raise the capital for different purposes." url="https://www.wallstreetmojo.com/initial-public-offering-ipo/"]initial public offering on the New York Stock Exchange in September 2016.

#2. HSBC Bank of Bermuda Ltd.

HSBC Bank of Bermuda Ltd. is the second bank in terms of the size of the total assets in Bermuda. It has acquired assets of around $8.7 billion. This bank was established in the year 1889. Back then, it was called Bank of Bermuda Ltd. It is the most profitable bank in Bermuda. It has acquired almost 47% of the total local banking market. It also charges a monthly fee for checking accounts.

When HSBC acquired this bank in 2004, it had 1050 employees; now, employees have reduced to 730. As of February 2017, the net profits of this bank of 2016 were $117 million. If we compare the figure with the net profits of 2015, we would see that the net profits have increased almost thrice. In addition, the bank also paid a handsome dividend of $280 million to its owners.

HSBC also sold a  private banking operation to Butterfield, which reduced operating expenses by 18% from the last year’s operating expenses. HSBC has also contributed around $700,000 to the various social causes in Bermuda.

#3. Clarien Bank Limited:

Clarien Bank Limited is the third biggest bank in Bermuda. As per the last report, it has acquired total assets of around $1.1 billion. As per previous April 2017, Clarien Bank has made around $1.2 million of net profits in 2016, more than twice the net profits of 2015. Clarien Bank could hit such targets due to the tremendous downfall of operating expenses and increasing new lending hugely.

What is strange is even if the net profits of 2016 were at an all-time high, the revenue of 2016 was 3% less than the revenue of 2015 because the impaired loans have a large chunk (around 15%) of the total portfolio. Previously, it was named Capital G Bank Ltd. It amalgamated and changed its name on 7th January and 22nd April 2017. Clarien Bank charges a monthly fee for checking accounts like all other local banks.

#4. Bermuda Commercial Bank Ltd. (BCB):

Bermuda Commercial Bank Ltd. (BCB) is the fourth bank in Bermuda as per the size of the total assets. The total assets of Bermuda Commercial Bank Ltd. are more than $649 million as per the last report. It was established in 1969 as Bermuda Provident Bank Limited as per the act of Parliament. Later, in 1984, it changed its name to Bermuda Commercial Bank Ltd. The head-quarter of this bank is in Hamilton.

One of the four licensed banks in Bermuda has employed around 73 employees who take care of their varied customers. BCB offers various financial products and services ranging from savings bank accounts to fixed deposit accounts to e-banking services, drafts, and credit cards. The bank also offers investment products to its high-net-worth customers.

The bank charges a monthly fee for maintaining checking accounts. It has also acquired two companies in Bermuda in 2011 – Charter Corporate Services Ltd. and Paragon Trust Ltd. As per the last report, BCB has generated well over $36 million in total income in 2016, which is more than double what BCB has earned in the previous year.

Thus, from the above details we get a clear idea about all the 4 banks that have been operating in the Bermuda region for a long time and providing exceptional level of service. Not only this, it is also to be noted that these banks have created a huge employment opportunity for finance professionals who have the required skill, knowledge, experience and interest to provide their best in the sector to help it grow and flourish.