The dust may be settling at Butterfield Bank but the impact of a traumatic period that drove the 152-year-old financial institution to the brink of disaster is still rippling through the community. The price for the failure of massive investments linked to US mortgages has been paid by the shareholders who have seen the value of their holdings slump and by the pensioners who had relied on Butterfield dividends for much of their income.

Taxpayers have also taken on some of the risk inherent in the bank's recovery efforts, through Government's guarantee of a $200 million preference share issue last year.

It could have been much worse - from a Bermuda standpoint – Butterfield was truly "too big to fail". The impact of the Island's largest locally-owned financial institution being closed down by regulator the Bermuda Monetary Authority would have been enormously damaging, not only to the Island's local economy, but also its reputation abroad, on which Bermuda's international business sector is built.

The bank appears to have stabilised somewhat over the past five months, since a group of mainly overseas investors ploughed in $550 million, allowing Butterfield to sell off the vast majority of the troubled assets that have dragged it down over the last couple of years.

But many questions remain about how the bank arrived at the edge of the abyss. Today, The Royal Gazette seeks to tell this story, using sources including the bank's own financial statements and annual reports, independent experts and sources who were involved with the bank during the period leading up to its darkest hour.