Bermuda Commercial Bank (BCB) is entering into a management consulting services arrangement for a six-month period with Bermuda-based Meritus Trust Company in regard to its trust business as part of a “new strategic direction” under recently appointed chief executive officer Peter Horton.

Mr Horton explained that senior management changes have been made as he puts together a new ‘C’ suite to support strategic planning as he moves the bank forward. BCB is wholly owned by Somers Ltd, a Bermuda Stock Exchange listed company.

Neil de ste Croix, BCB’s trust and corporate services division leader has been made redundant in recent days along with a second employee in the Paragon Trust sector of the bank, while chief operating officer Horst Finkbeiner left the bank within a few weeks of Mr Horton taking up the appointment as CEO.

However, the retirement of Michael Collier as chairman of the board, announced this week, is because of health problems, Mr Horton said. He has been replaced in a temporary capacity by Alan Gilbertson.

Mr Horton said: “Michael will continue to support the bank as we need it. He has BCB running through his blood. And we’re all extremely sorry that he’s going.”

He added: “In terms of the bigger picture ... Michael’s been extremely supportive, been very much at the forefront, in allowing me to make the changes to this bank that I need to bring about.”

Mr de ste Croix, who is a well known cyclist, is named in a lawsuit along with Bermuda Commercial Bank Ltd, BCB Paragon Trust Ltd. They are among those being sued because of an alleged “brazen and extraordinary breach of their fiduciary and contractual obligations” which resulted in the assets of a $7 million trust fund being virtually all dissipated, according to a complaint filed in a US court.

Mr Horton, interviewed by The Royal Gazette at BCBs Par-la-Ville offices with senior bank officers and Mr Gilbertson in attendance, called the complaints “extremely unique and isolated”, and said the bank would fight the case vigorously. They are currently arguing that New York is the wrong jurisdiction in which the case should be adjudicated.

He said the redundancies were as a result of a duplication of some roles. “Positions have become redundant in the business — it is the worst part of my job to let anybody go, but I have to be commercially minded and focused to make this business successful.

“We’ve brought in a different management arrangement — we’ve treated the staff in appropriate way, taken proper advice, and now we have rolled up our sleeves,” he said.

“BCB brought me in to be the CEO that is really going to establish a new strategic direction for the bank, to move forward and allow it to grow.” He called the bank Bermuda’s quietest and the smallest, and said: “A lot of the changes you see now are about me starting the transformation of the business.”

“ ... We’re putting together a new C suite, the top leadership at the bank.” And pointing to the changing regulatory environment, he said: “You need an appropriate and experienced structure in the organisation.”

He called the trust industry in Bermuda “a mature industry,” and commented: “A lot of businesses only get growth by taking business from other companies, so when you operate in an environment where you have a mature environment and an increasing weight of regulation through a combination of regulations set out by the Bermuda Monetary Authority, and more recently by Fatca, which is a very substantial feature, then they’re faced with the same challenge and faced with same processes of ‘how do we go forward?’ — but we have to find a way of remaining relevant commercially, and at the same time addressing a shrinking market and an increasing regulatory burden, which equates to losses or minimal profits.

He described the new arrangement: “Meritus Trust Company Limited has been engaged by the Bank for a six-month period to provide management consulting services.”

An earlier version of this article described it as a partnership arrangement. “The parties have not entered into a ‘partnership arrangement,’.” he said after the story appeared,

During the interview, he said: “It is a part of that transformation,” he said.

“Where we’ve been looking at, and working (towards) for quite a while, is for an alternative approach for the managing of that business.”

Mr Horton said the strategy is to “ ... bulk that business up, and take advantage of economies of scale, without merging ... but we can achieve that bulking, which is essentially what we can do, with a management partnership.”

“We are very, very excited by what we’ve put in place,” he said.

Mr Horton added that the partnership arrangement has been approved by the BMA.

“It now gives me so much more depth to my trust business — it brings in different expertise, a difference perspective and — speaking for BCB — gives me a scalability I could not have achieved in any other way.

“So we can start to move onto the front foot about where our trust company can go in a difficult marketplace.”