The Bank of Butterfield has agreed to buy the multibillion dollar private banking trust and investment arm of rivals HSBC Bermuda.

The move means Butterfield will acquire the Bermuda Trust Company Ltd as well as the trust and investment business of HSBC.

At the end of last year, HSBC’s trust and investment arm had about $24 billion of assets under administration and $1.5 billion in assets under management.

The banking portfolio had around $12 billion of assets under management.

Butterfield has also entered into a referral agreement with HSBC Bermuda to take on select private banking clients.

Butterfield will take on a number of HSBC Bermuda’s trust and investment business staff with a view to continued relationships between clients and bank staff.

A Butterfield spokesman said: “Butterfield will be increasing headcount in our private banking, trust and asset management areas as a result of this transaction.

“We will offer employment to a number of HSBC Bermuda trust and investment business employees to address increased business volumes and ensure that transferring clients enjoy continuity of service.

“The final number of employees we welcome to Butterfield will depend on how many of the HSBC Bermuda employees who are offered employment accept those offers.”

Michael Collins, the Butterfield CEO, said: “Our goal is to achieve a seamless transfer of the business and ensure that clients enjoy continuity of service and access to a equivalent range of wealth management products and solutions to that which they have become accustomed to at HSBC.”

He added: “Butterfield’s growth strategy is centred on development of our core business in existing markets.

“The acquisition of these businesses in Bermuda is very much in keeping with that strategy.

“It allows us to add scale to our franchise and bench strength to our teams of professional wealth managers and fiduciary specialists in a market where we have a significant presence and long history.

“We are well positioned to take on the HSBC business and we are working closely with HSBC to ensure we do so in a way that is minimally disruptive to clients.”

HSBC Bermuda CEO Richard Moseley said: “We are pleased to have reached this agreement with Butterfield. It marks further progress in delivering against the HSBC Group’s strategy to simplify its business.”

He added “Following the completion of the transaction, HSBC Bank Bermuda Limited will continue to focus on customers in our three core business lines — retail banking & wealth management, including HSBC Premier and asset management, commercial banking and global banking and markets.”

“Until the transaction is complete, we will continue to provide the same level of service to our private banking clients whilst working with Butterfield towards a smooth transition of the business.”

The 157-year-old Bank of Butterfield has offered trust services for more than 70 years and brokerage and asset management for nearly half a century.

Mr Collins said: “We understand the needs of high net worth individuals and their families and we look forward to working closely with our new clients to ensure their needs continue to be met effectively, efficiently and with a highly personal touch.”

The transaction, which is subject to regulatory approval, is expected to close in the first half of next year.

The Bank of Butterfield in the last few years has bought HSBC’s corporate and retail banking arm in the Caymans, as well as Guernsey-based trust and corporate services firm Legis Group Holdings.

While the HSBC group has previously reacted to the changing regulatory landscape for American private wealth clients. In 2011, shortly before the US made effective FACTA (Foreign Account Tax Compliance Act) as a federal law, HSBC was the first major firm to say it would no longer offer wealth management services to US-resident private clients from locations outside the US.