Bermuda Commercial Bank Ltd. (BCB) yesterday announced it has sold a controlling interest to Bermuda-based exempted company Permanent Investments Ltd. in a deal worth around $34.2 million.

The bank's new owner, which is owned and funded by four investment funds and companies, has bought 3.46 million shares from the First Curacao International Bank (FCIB), which gives Permanent a 54 percent stake.

Permanent will make a cash offer of $9.88 apiece for all the remaining shares, the same price it paid for its controlling interest. This will give BCB shareholders a 27 percent premium on Wednesday's closing price of $7.75.

The deal values the bank at around $63.3 million, which is below its book value. BCB's last annual earnings statement, showed the bank had shareholders' equity of $75 million at the end of September last year.

Bermudian Michael Collier, chairman of Belco owner the Ascendant Group Ltd. and former chief executive officer of Butterfield Bank, will join the board as a Permanent nominee.

Mr. Collier said yesterday that three of the four entities behind Permanent were based overseas, while one was a Bermuda exempted company. He said details would be revealed in the tender offer letter, which will be mailed to BCB shareholders not later than April 30 and which will include information on how shareholders can accept the offer.

Other incoming directors are Warren McLeland, a former managing director of Chase Manhattan Bank, and Eric Stobart, a former managing director and finance director of Hill Samuel Bank.

Yesterday's joint statement from Permanent and BCB said the four entities behind the bank's new owners were associated with Mr. Collier and the other new directors.

All three new directors sit on the board of Bermuda-based companies Utilico Ltd., of which Mr. Collier is chairman, and Utilico Finance Ltd. Utilico invests in a portfolio of primarily in energy companies.

Mr. McLeland is also a director of the Australian company Wilson HTM Investment Group, who entered into a strategic relationship with Deutsche Bank in 2005 to focus on growing its private wealth management and mid-market corporate finance business. He also sits on the board of Trust Company of Australia, Eclectic Investment Trust plc and Intellect Holdings Ltd.

Mr. Stobart is a trustee of the UK-based Lloyd's TSB Group pension scheme and chairman of its Investment Review Panel.

Anthony Cijntje, Geomaly Martes, and Michael Cranfield resigned from the BCB board yesterday following the sale of FCIB's interests in the bank. Mr. Cranfield remains as chief information officer.

BCB's chief operating officer Horst Finkbeiner said yesterday that no redundancies were planned among the bank's 38 staff as a result of the takeover.

Jeremy Cox, the CEO of financial regulator the Bermuda Monetary Authority, welcomed the deal.

"The bank had previously experienced a period of uncertainty in relation to its ownership, and the Authority is pleased that this outcome has now resolved that situation," Mr. Cox said.

Finance Minister Paula Cox said: "This transaction provides the possibility for greater competition in our local banking sector and offers the potential for more options for the consumers with the resulting benefits.

"The acquisition of Bermuda Commercial Bank confirms that Bermuda entities still hold some attraction for the discerning investor despite the difficult economic environment.

"Such an acquisition is a testament to our reputable and credible regulatory framework, our business operating environment, and Bermuda as a jurisdiction."

The 41-year-old bank has been searching for a buyer for the past four years and Mr. Finkbeiner estimated it had talked with 50 to 60 different interested parties during that time.

Two years ago, BCB found a buyer for the bank and agreed terms — only for the then-controlling shareholder, FCIB, to pull the plug on the deal.

FCIB was then acting under instruction from the Central Bank of the Netherlands Antilles, which took control of the Curaçao bank following an investigation by the Dutch authorities into alleged money laundering and other illegalities in September 2006.

The investigation resulted in former BCB chairman and FCIB principal John Deuss being questioned by Dutch authorities.

Yesterday's takeover deal comes as a relief and allows the bank to open a new chapter in its story.

"We have been in the sale process for the past three or four years and we've been in limbo during that time," Mr. Finkbeiner said. "We couldn't do much, because we did not want to upset the sale process. Now that we have this sale completed, we are working with our new owners on our priorities and what we want to do."

Mr. Finkbeiner said the bank will be looking to "re-engage with the local banking market" but to continue to focus on the niche it serves best, namely corporate, commercial and high net worth clients.

Asked whether BCB would be aiming to lure customers from Butterfield Bank, after its recent tumult, Mr. Finkbeiner said: "I think all the banks in Bermuda are good banks and it's about differentiation. What we offer is a different kind of banking and experience, and we have an extremely conservative approach."

BCB did not invest in any of the securities backed by US mortgages or credit that have proved problematic for many financial institutions around the world.

Record low interest rates have damaged its profitability, however, and the bank recorded a loss of $380,000 during its last fiscal year through September 2009. The bank did not pay a dividend to shareholders last year.

BCB is advising its shareholders to consider Permanent's $9.88 tender offer.

Mr. Collier said that while he could not reveal the four entities behind Permanent, they were a group who liked Bermuda and its business environment.

He added that the bank had been stalled by its situation in recent years, but could now move forward.

"This bank is squeaky clean in its operations and investments — it did not get involved with the mortgage-backed securities that affected so many other banks around the world," Mr. Collier said. "This is a great opportunity to get the bank going again and there are plans to upgrade the systems and the like and hopefully, we can get the bank paying dividends again."

Mr. Collier said he knew the bank and many of its staff well and had done business with them during his 34 years at Butterfield Bank, which ended when he retired as CEO through ill health in late 1996.

He added that further board changes would be made closer to the tender. The current chairman of BCB is 82-year-old Clarence Terceira.

Financial advisory firm Keefe, Bruyette & Woods advised the BCB board on the deal. Permanent was represented by First Bermuda Group.