Bermuda Commercial Bank yesterday announced plans to set up a new investment holding company called Bermuda National Ltd (BNL).The restructuring appeared to be aimed at strengthening BCB’s balance sheet and allowing greater flexibility for making acquisitions.Earlier this month BCB’s credit rating was downgraded by Moody’s because of increased risk associated with its investment portfolio, which the ratings agency said had risen from five percent of total assets in 2010 to 45 percent.It’s expected BNL will merge with BCB as of October 1 with the bank becoming a wholly owned subsidiary of BNL. BCB would delist from the Bermuda Stock Exchange with shareholders then becoming shareholders in the new BNL without any dilution of their percentage ownership.“The directors believe that BNL will provide an enlarged platform for corporate acquisitions within the financial services sector,” BCB said in a statement yesterday. “BCB’s current regulatory capital restrictions place a limit on the number of acquisitions it can make without impacting its regulatory capital position.“Whilst BCB is subject to regulatory capital requirements, BNL as an investment holding company is not subject to such constraints and the Directors believe it should therefore offer a greater opportunity to outside investors who may wish to invest in a diversified financial services company.“The fallout from the 2008 financial crisis and the current uncertainty in Europe continue to provide a number of attractive opportunities within the financial services sector which BNL may be able to take advantage of in the future.”The chairman of the new holding company will be Warren McLeland, who has worked for Reserve Bank of Australia, Bain and Company and as managing director of Chase Manhattan Bank.“The new holding company has many benefits for stakeholders and while the general economic climate is challenging there are many attractive opportunities that will be available to our group and I am delighted to have this opportunity to be the chairman of the new holding company,” Mr McLeland said.BCB said that since the change of majority ownership in BCB in 2010, its operations and financial performance have grown significantly.“The BCB board does not consider the present corporate structure to be in the best long term interests of the BCB shareholders and it believes that the operation of its banking, treasury, custodial, asset management, trust and corporate services in Bermuda should be separated from the investment holding company function,” BCB said.BCB continued: “BNL will operate purely as an unregulated investment holding company. It will not undertake any banking business nor will it undertake management activities in relation to any of BCB’s regulated activities. It is envisaged that the BCB Shareholders will benefit from an enlarged holding company group which the Directors believe will ensure, over time, increased liquidity in share dealings and enhanced valuation multiples as the BCB Group grows.”BCB will also maintain its existing board which will be distinct from, and function independently of the BNL board.The day to day operations of BCB and its medium-term business strategy will remain unchanged and BCB said it will continue to be regulated by the Bermuda Monetary Authority.BCB said: “After the merger is consummated and subject to certain regulatory approvals being obtained, BNL intends to acquire from BCB certain of BCB’s investments in Westhouse Holdings plc, Private and Commercial Financial Group PLC and Die Schweizerische Nationalbank at cost,” BCB said.“The BNL acquisition will further enhance BCB’s balance sheet by ensuring that certain investments are held at the holding company level rather than at the BCB level. In time, the directors believe that BNL will be able to benefit from synergies across the BCB Group with fewer potential conflicts of interest among the BCB Group’s subsidiaries.“The BCB balance sheet will continue to be managed as it is today to ensure that it remains transparent and liquid. Importantly, depositors will be ring-fenced from any investments that are made at the BNL level.BCB chairman Michael Collier said: “This is a natural development for the bank and a credit positive event for all stakeholders. Depositors should be particularly pleased. The bank continues to improve it customer service levels and expand its product range to suit customer requirements.“An important part of the product delivery is a commitment to a transparent, liquid and pristine balance sheet and a robust set of financial statements. The setting up of new holding company structure will facilitate and assist in the delivery of this commitment.”BCB added: “The Directors believe that having a number of financial service companies under one umbrella should also improve the overall operating efficiency of these organisations by facilitating the more effective utilisation of core competencies in particular in the areas of compliance, risk management and IT across the BCB Group and provide a broader outlet and scope for key executive talent within the group.“The Directors believe that the implementation of BNL as the holding company of the BCB Group may increase the group’s ability to access additional equity capital in the future.”BCB reported a profit of $3.23 million for the six months ended March 31, compared to $1.35 million 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.