Butterfield Bank is using some advice from major shareholder the Carlyle Group to help ensure that the investment problems that plagued it over the past three years cannot happen again.

The bank's new chief financial officer Brad Rowse told The Royal Gazette said Carlyle would be acting as a consultant as the bank took steps to bolster its assets-liabilities management.

A new ALCO (Assets-Liabilities Committee) will be formed to bolster Butterfield's financial risk management.

On the same day Mr. Rowse made his remarks, Butterfield announced the resignation of chief risk officer James Stewart, who also stepped down as a director. Mr. Stewart, a 25-year veteran of the financial services industry, had occupied the CRO role for 21 months.

In March this year Carlyle Group, one of the world's biggest private-equity organisations, invested $150 million in Butterfield.

The deal was part of a $550 million injection of new capital from mainly overseas investors that put the bank back on an even keel after a traumatic period during which Butterfield suffered huge losses in investments tied to US mortgages.

Mr. Rowse started working as CFO four weeks ago, having relocated from Oakville, Ontario, with his wife and two daughters.

With the troublesome investments having been sold off, Mr. Rowse believes the bank is now well capitalised and strong. Now he is playing a major role in ensuring there is no repeat of previous difficulties.

"I'm in charge of the finance and treasury functions," Mr. Rowse said. "The treasury aspect is very important, especially as the bank has a relatively high portion of its balance sheet in investments, due to its nature as a Bermuda bank.

"The history is what it is — the future has to be different.

"The bank has good capitalisation and it's got its risk points identified. And it's been open to the market about those. The bank is taking the right steps to minimise the risk."

If anything, he suggested, the bank was being too cautious with investment durations, with a focus on short-duration products, in order to be able to take advantage of higher interest rates when they come. A more balanced mix of durations could improve returns, he said. As of June 30 this year, Butterfield's investment portfolio was valued at $2.44 billion.

The ALCO will focus on gaining a full understanding of balance sheet risk, Mr. Rowse said, and examine how assets and liabilities behave in relation to consumer and market behaviour.

Mr. Rowse joined Butterfield from Scotiabank in Toronto where he was most recently senior vice-president and CFO for International Banking, with overall responsibility for the financial accounting function in more than 40 countries. Before Scotiabank, he spent 13 years with PricewaterhouseCoopers in Canada.

He said the Butterfield job appealed to him as it repeated the international nature and diversity of his previous post, but because of Butterfield's smaller size, he will also be able to participate in strategy decision-making.

Competition is warming up in the Bermuda banking sector, with the rejuvenation of Bermuda Commercial Bank following its takeover by Permanent Investments Ltd., and Capital G Bank's planned merger with First Bermuda Group.

Mr. Rowse said: "We welcome competition. I hope that Capital G's merger with First Bermuda Group goes through and it makes them a stronger institution. I think a strong banking sector helps everybody. We are a large local bank and it is our goal to continue to be that."

As for operations outside Bermuda, Butterfield wants to focus on its businesses in Cayman, Bahamas, Barbados, the UK and Guernsey, he said. Last month Butterfield sold off businesses in Malta and Hong Kong, which were "geographically too far away to control for an organisation of this size", he added.

Mr. Rowse said that he did not a see a need for the bank either to acquire or dispose of more businesses at this time.

"Butterfield has been around more than 150 years, because it's a good bank," Mr. Rowse added. "You have to borrow wisely and lend wisely. You keep an eye on the problem loans and you make sure you are well enough capitalised to be able to ride out the bad times — and we are."