Shares of Butterfield Bank plunged nearly 30 percent yesterday to their lowest level since 1997.

The fall to $2 per share in Bermuda Stock Exchange (BSX) trading was expected after a deal that pumped $550 million of new capital into the bank was announced on Tuesday. More than 600,000 Butterfield shares traded.

The bank's fall sent The Royal Gazette / BSX Index tumbling more than nine percent. The Finance Ministry revealed that one of the bank's new investors — the Bermuda Government Pensions Fund — ploughed $30 million into the 152-year-old institution.

Two credit ratings agencies, Moody's and Fitch, downgraded Butterfield amid concerns over the bank's problematic investments linked to US mortgages.

The Bermuda Monetary Authority also said plans for a bank deposit insurance scheme should be finalised by year-end.

Meanwhile, Butterfield's rival, HSBC Bermuda, said its 2009 earnings fell 36 percent to $221 million, as low interest rates squeezed profit margins.

See Business, Page 25