-- but refused to answer questions on whether it would move any of its operations elsewhere.

The Royal Gazette asked the bank's president and chief executive officer Henry Smith on Tuesday to clarify the bank's position on what would happen if it was not granted an exemption from the 60/40 ownership rule.

The bank dodged a series of detailed questions on the matter which are listed below.

The newspaper reported on Friday that Mr. Smith had implied that the bank could quit the Island at a question and answer session on Thursday. On Monday, Mr. Smith slammed the story as "negative'' and "sensationalist'' and claimed the newspaper misquoted him and took his comments out of context.

But The Royal Gazette said it stood by its story, and that Mr. Smith's comments had been vetted by the bank.

On Tuesday the paper sent Mr. Smith a comprehensive list of questions which have been left unanswered.

At a question-and-answer session after a talk to the Women in International Trade on the future of the bank, Mr. Smith was asked what the bank would do if it was not given an exemption to the 60/40 ownership rules.

He answered: "I don't like to consider that because the only answer is a negative one for everybody concerned but in the interest of the shareholders we would have to look at restructuring so that we could have the freedom to conduct our business.'' The Royal Gazette that afternoon faxed Mr. Smith's answer to the bank, to check he agreed with the quotation attributed to him.

A spokesperson for the bank faxed back a reply with small changes, which were implemented. They agreed with the quote.

The bank wants an exemption from the 60/40 ownership rule so it can be listed on the Nasdaq.

Bank refuses to answer specific questions The bank says it needs the freedom given by the exemption to become a global player and to raise its share price, which Mr. Smith believes in undervalued.

The Royal Gazette felt Mr. Smith's letter to the Editor, which was published in the local media in full page paid adverts, left many questions unanswered, so it faxed the bank a series of specific questions, which were: "If the bank were not to get the 60/40 exemption what would happen?'' "Would the bank consider being registered elsewhere if it did not get the 60/40?'' "If not, how would the bank get around being a local company to avoid the 60/40 rule? or would the bank simply accept it?'' "What does Mr. Smith mean by restructuring? Does it mean the bank would consider changing its base, in the way many of the exempted companies e.g.

Jardine Matheson, are Bermuda-based but have headquarters elsewhere?'' "When he speaks of `freedom to conduct our business' what does he mean? If some of the business was to move, would the bank keep its commitment to its over-the-counter customers on the Island?'' "If the bank were to move abroad, would that not leave it open for takeover by giant banks such as Chase Manhattan etc.?'' "At what stage is the bank at in its dialogue with the Government about the exemption? And when is a resolution expected?'' None of the individual questions were answered. Instead, a spokesperson for the bank issued the following statement: "As you are already aware, we are currently holding productive talks with the Government; we think the 60/40 exemption issue could be resolved soon. The Government understands the issues the bank is facing, and the benefits that a secondary listing would bring from both the bank and Bermuda.

"When discussions with Government conclude, we look forward to communicating the bank's plans to the public and our shareholders.

"As we have stated on a number of occasions, Bank of Bermuda is committed to the Island. Our headquarters are here and will remain so. The majority of our retail clients division is in Bermuda and we have no intention of reducing our level of service to the Island. In fact, we have plans in the pipeline that will continue to improve and grow the services we provide to the people of Bermuda.'' Bank chief: Henry Smith