Bermuda's reputation as a sophisticated offshore financial centre, the bank's top brass declare. Ahmed ElAmin reports The Bank of Bermuda has slammed the PLP for sinking its bid to gain exemption from the Island's regulations limiting foreign ownership in local companies to a maximum of 40 percent.

Bank executives have argued the exemption was needed as a precursor to listing its shares on the Nasdaq and expanding its international presence. The company's stock is currently only listed on the Bermuda Stock Exchange (BSX).

The company attempted to gain exemption through a Parliamentary bill.

Executives said the exemption was necessary because they would have difficulty controlling foreign ownership on an overseas exchange.

In a letter to shareholders bank chairman Eldon Trimingham and president and chief executive officer Henry Smith noted the 15 dissenting votes against the private bill were all cast by Opposition Progressive Labour Party MPs.

"We are deeply disappointed by the decision, which we strongly believe runs contrary to the best interests of the bank, its shareholders and staff, and Bermuda generally and, indeed reflects badly on Bermuda's reputation as a sophisticated offshore financial centre,'' the two stated jointly in the letter.

"We are particularly disturbed that the vote was taken without the benefit of a debate, leaving us and the general public ignorant of the motives behind the dissenting votes. We are left to conclude that there remains a serious lack of understanding amongst the opponents to this bill about what we were seeking to achieve in the interests of Bermuda and about the extraordinarily competitive business environment in which the bank operates around the world.'' Shadow Minister for Finance Eugene Cox has attacked criticism of the party over the dissenting votes by saying the issue "should have been brought forward as part of the Government's legislative programme''. He also added that if four other UBP members had not been absent from the House during the vote the bill would have passed.

"As the Shadow Minister of Finance, I have always stated that changes to the 60/40 rule would be done on a selective basis,'' he said referring to PLP leader Jennifer Smith's statement on the issue.

"...In that release, it was made clear that the legislation controlling the bank should be written in the body of legislation governing the Bermuda Monetary Authority as well as in the Bermuda Bank Act 1998.'' In her statement Ms Smith said the Monetary Authority had indicated a foreign offer to take over the bank would be weighed against a series of undrafted regulations.

"It is the opinion of my Party that the Bank of Bermuda bill should not be considered further until such time as the appropriate regulations are in place,'' she stated.

Mr. Trimingham and Mr. Smith repeated their resolve to achieve a secondary listing overseas.

"Management and your board will review alternative strategies to achieve this goal and will keep you advised accordingly,'' they stated. One option is to create another class of shares which would then be listed on the Nasdaq while the first class traded on the BSX. Another option is to create a holding company for the overseas businesses, in effect creating a separate entity.

A third option, which Mr. Smith has said won't happen, is to move the bank out of Bermuda to another jurisdiction.

In updating shareholders on the bank's operations Mr. Trimingham and Mr. Smith said the investment and treasury divisions were performing well. Corporate banking was being affected by the "dramatic changes'' in the offshore insurance industry.

"In recent months, over capacity, declining operating leverage, and a general inability to employ excess capital has driven increased consolidation in Bermuda, the US, and Lloyds,'' they stated. "Of particular importance to corporate clients will be the bank's current effort to enhance its corporate cash management and investment services. We are working to simplify our corporate account structure and improve client reporting, and each corporate client now has a dedicated relationship manager and account representative.'' Corporate trust, while affected by declines in asset values in Hong Kong and Asia has been balanced by growth in Europe and Bermuda. The growth in business has resulted in a shortage of experienced staff in many of the bank's offices.

The bank has responded by restructuring the New York subsidiary to provide mutual fund clients with accounting and valuation services. The bank plans on expanding the New York service "significantly'' to meet the demand.

Private client services are also being reorganised as the bank becomes a specialist private bank.

"Recent events in Asia have clearly demonstrated the value of a strong private client business with a diversified client base to balance our more volatile institutional business, and we therefore expect to commit significant resources to the enhancement of our private client services during the coming year.'' HOW MPS VOTED For the motion allowing the bank to be more competitive on the international scene: Mr. E. P. Adderley, Mr. J. Barritt, Mr. A. D. Dodwell, Mr. M. H. Dunkley, Mr.

W. L. Furbert, Dr. E. G. Gibbons, Mr. L. O. Gibbons, Ms. P. F. Gordon, Mr. G.

R. Pitman, Mr. M. T. Smith, Mr. H. W. Soares, Mr. R. D. Spurling, Mrs. M. I Young.

Against the motion: Mr. D. H. Allen, Mr. N. B. A. Bascome, Mrs. G. A. Bell, Mrs. L. M.

Browne-Evans, Mr. D. V. Burgess, Mr. R. A. Burrows, Mr. C. E. Cox, Mr. D. P.

Lister, Mr. W. M. Lister, Mr. S. W. Lowe, Mr. S. A. Morton, Mr. W. C. Roberts, Mr. W. A. Scott, Mr. O. A. Simmons, Ms. M. D. R. Webb.

Those who did not/could not vote or were absent: Dr. E. F. Brown, Mr. M. A. Burgess, Ms. P. A. Cox, Mrs. A. F. C. DeCouto, Mr.

C. J. Dill, Mr. Q. E. Edness, Mr. J. I. Pearman, Ms. J. M. Smith, Mr. L. C.

Williams, Mr. C. V. Woolridge.

Mr. T. G. Moniz abstained.

Eldon Trimingham Henry Smith