While Bank of Bermuda shareholders question whether or not they are getting a fair price for their investment, a local investment advisor has cited the deal as paving the way to an excellent investment opportunity with HSBC.

The Bank, in announcing Tuesday that it was to be bought out by multinational banking giant HSBC, said bank investors would get a $45 cash payment for each share they owned.

That amount represents 16 percent more than the average closing price for the bank?s shares trading on the Nasdaq over the last three months. But only $40 of that payment is being made by HSBC while the Bank of Bermuda is adding a $5 dividend payment on top.

Broken down, that means HSBC is paying a premium of three percent above the average closing price for the shares over the last three months. It also means that the London-based group, which has spent about $16 billion this year alone in buying up smaller banks in the Americas region, is paying out less than the current trading price of the shares. Bank of Bermuda shares closed yesterday at $44.84.

One investment manager yesterday cited the price for investors as ?low? while another told that the price was fair when put in the context of what could happen in the long term. Some bank staff also voiced the opinion that the $45 sum per share was not high enough and users of a Yahoo! finance message board on the Bank of Bermuda themselves cried foul over the $45 payment.

David Bolden, president of Emerald Financial Group, said the price that was being offered to shareholders for each share ? with the bank and HSBC announcing yesterday that the $45 payment was 16 percent more than the average closing price over the last three months ? was a fair price for HSBC. ?They won?t be accused of over paying,? in their purchase of the Bank of Bermuda, Mr. Bolden said.

Mr. Bolden also cited the transaction as good for Bank of Bermuda investors: ?With a long-term orientation, investors can justify the price the bank was sold at. Shareholders are best served in being with HSBC in the future. Being part of a larger organisation will be best as it is an opportunity for shareholders to enjoy greater returns with HSBC. The Bank of Bermuda was not an institutional stock and didn?t have analysts following it. HSBC is well followed which can see the stock price go up.?

Mr. Bolden said his advice to clients holding bank shares would be tailored to the price they initially paid for shares but he said that in the near-term he thought the return on capital would be quite high for those who converted their holdings into HSBC stock.

?Investors are best served to maintain their holdings at this point in time. Looking at the short-term, HSBC is a great acquisition. This is not really the time to sell.?

Bank of Bermuda management announced yesterday that shareholders who chose to take up an offer for HSBC shares instead of the cash payment would be able to do so without forking out the normal trading fees.

Anne Kast, president, Kast Investment Management Ltd. said her initial reaction was that the price being offered to shareholders ? $40 from HSBC and a $5 dividend payment from the Bank of Bermuda per share ? was on the low side.

?I think that price is low,? Ms Kast said with the caveat that she is not a takeover analyst. She added that it appeared to be ?a good deal for HSBC?.

Ms Kast, herself a Bank of Bermuda shareholder and former employee, said that she had had some calls from clients who hold Bank of Bermuda shares but they were looking more for her her thoughts on the transaction rather than to make decisions on what to do with their Bank of Bermuda investment.

Although saying investment advice would be a little premature at the moment ? ?this has not been approved yet, the cheques have not been cut? ? Ms Kast said that when the time came her counsel would vary depending on the client.

She said investors who have had sizable and long-term investors in the bank may now diversify. She added that diversifying the payout from Bank of Bermuda into other stock, quite possibly with other local companies, would be a more likely scenario than transferring the investment into HSBC shares.

?I don?t think HSBC will be a serious part of the portfolios for those accounts.?

For those with more moderate holdings in the bank, Ms Kast said: ?The question will be do they go with new bank stock or diversify.?

Looking at investment options in the local market, Ms Kast said: ?The Bank of Butterfield has seen a recent rise. That stock is moving up but what they have not made is moves (to list) on the Nasdaq,? she said, speaking of how Butterfield, the second largest local bank after the Bank of Bermuda, had not followed its bigger competitor in taking its shares public on a major stock exchange.

Regardless of that, Ms Kast said she saw Bank of Butterfield as a good choice: ?I like it as an investment just in and of itself. And like that there are other good local shares, Argus and Belco and my own plug, for the Bermuda Insurance Index Fund,? which is managed by Kast Investment Management Ltd.

She added that local investors had been happy to invest in domestic companies: ?Those investments have been good, they know the companies, management lives in the neighbourhood...?

Ms Kast added she would expect Bank of Bermuda shareholders to reinvest the monies they received for their shares in other stock over using the money to buy up property or consumer items: ?I wouldn?t expect it to be put into consumption. There is the strong possibility that it would remain invested in financial assets.?

On the Internet yesterday, a Yahoo! Finance message board on the Bank of Bermuda was a platform for some ? presumed to be Bank of Bermuda investors based on their comments ? to voice concerns over the price being paid to investors.

One posting said: ?$45 a share is too low and we should remain independent,? while another said eyes should be on the stock of the Bank of Butterfield, ?watch it will go to $50 now?. Butterfield?s stock is currently trading at $39.

Another message board user said his investment would be undermined by the taxes he would have to pay: ?A forced sale for me would create a tax liability such that I would effectively realise about $38 which I do not wish to do. Also the dividend will be sorely missed.?

Yet another poster wrote: ?I am certainly happy to see all this anti-sale sentiment. By the end of the year the stock would have been trading at about $45 anyhow, based on third quarter earnings. Why oh why are they giving it away? If it does go through I will surely reinvest partly in Butterfield shares.?