Overview of 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 and as a result, it is gradually becoming a popular international 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 the US $22,700 million. And the deposit guarantee is the US $25000.
Structure of Banks in Bermuda
The peculiar thing about Bermuda is there are only four banks in Bermuda. 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 whatsoever to operate in these countries. However, in Bermuda, things are much different and strange. Bermuda doesn’t allow these international banks to get registered and operate.
Due to this approach, the whole banking sector in Bermuda was reduced by $1.49 billion during the last year.
List of Top 4 Banks in Bermuda
- Butterfield Bank
- HSBC Bank of Bermuda Ltd.
- Clarien Bank Limited
- Bermuda Commercial Bank Ltd. (BCB)
Let’s look at these banks as per the size of the assets acquired by them –
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Source: Banks in Bermuda (wallstreetmojo.com)
#1. Butterfield Bank:
Butterfield bank is the biggest bank of Bermuda, has acquired around $11.1 billion in total assets. It has also captured around 38% of the local banking market. It is like any other local bank charges its customers a fee every month for checking accounts. Till the end of 2017, the bank has a target of reaching a 60% efficiency ratio, because it has missed its target of reaching a similar efficiency ratio from March to June 2017.
During these three months, the bank’s non-net interest expenses catapulted to $75.3 million which is around $9.5 million more than the previous year. Even if Butterfield bank has a reputation of around 160 years, 2017 is a new era for them because in 2017 they would put behind the crisis of sub-prime mortgage of the US stooped them down to its knees for a long time. As per the statistics of February 2017, Butterfield bank has generated over $115.9 million as profits.
This is great news because the profits of 2017 have been almost $38.2 million more than 2016’s profits. Another noteworthy thing that should be mentioned is Butterfield’s huge shareholders’ list which also includes some prominent names of Wall Street. This is the sweet fruits of the initial public offeringInitial Public OfferingInitial Public Offering (IPO) is when the shares of the private companies are listed for the first time in the stock exchange for public trading and investment. This allows a private company to raise the capital for different purposes.read more of the bank 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 assetsTotal AssetsTotal Assets is the sum of a company's current and noncurrent assets. Total assets also equals to the sum of total liabilities and total shareholder funds. Total Assets = Liabilities + Shareholder Equityread more 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 the number of employees has reduced to 730 only. As per the statistics 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. The bank also paid a handsome dividendDividendDividend is that portion of profit which is distributed to the shareholders of the company as the reward for their investment in the company and its distribution amount is decided by the board of the company and thereafter approved by the shareholders of the company.read more of $280 million to its owners.
HSBC also sold a private banking operation to Butterfield which resulted in a reduction of operating expenses by 18% from the last year’s operating expenses. HSBC has also contributed around $700,000 into the various social causes in Bermuda.
#3. Clarien Bank Limited:
This is the third biggest bank in Bermuda. As per the last report, it has acquired total assets of around $1.1 billion. As per the last report of April 2017, Clarien Bank has made around $1.2 million of net profits in 2016 which is more than twice the net profits of 2015. Clarien Bank could hit such targets due to the tremendous downfall of operating expensesOperating ExpensesOperating expense (OPEX) is the cost incurred in the normal course of business and does not include expenses directly related to product manufacturing or service delivery. Therefore, they are readily available in the income statement and help to determine the net profit.read more and for increasing new lending hugely.
What’s strange is even if the net profits of 2016 was an all-time high, the revenue of 2016 was 3% less than the revenue of 2015. It is because of the impaired loans that have a large chunk (around 15%) of the total portfolio. Previously it was named Capital G Bank Ltd. It has amalgamated and changed its name on 7th January and 22nd April 2017 respectively. Like all other local banks, Clarien Bank also charges a monthly fee for checking accounts.
#4. Bermuda Commercial Bank Ltd. (BCB):
This 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 the year 1969 as Bermuda Provident Bank limited as per the act of Parliament. Later, in the year 1984, it has changed its name to Bermuda Commercial Bank. 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 checking accounts, fixed deposit accounts to e-banking services, drafts as well as credit cards. The bank also offers investment products to its high net worth customers.
The bank charges a monthly fee for maintaining checking accountsChecking AccountsChecking Account, also known as a transactional account, can be defined as a kind of deposits account held by a financial institution or non-banking financial institution which allows the holder of the account to deposit and withdraw money. This is one of the most liquid forms of money. It differs from a normal bank savings account since it allows multiple deposits and withdrawal in a particular period.read more. It has also acquired two companies of Bermuda in the year 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.
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