Butterfield Bank is to open an office in Halifax, Novas Scotia that could eventually employ as many as 400 people servicing the hedge fund industry.

Butterfield Fund Services (Canada) Ltd. will provide fund accounting and administrative services to hedge funds and alternative investment vehicles in North America.

A bank spokesman said no jobs in Bermuda or in the bank's other business centres will be lost as a result of the creation of the Halifax office, where it expects to add 30 to 60 positions next year.

The bank has been given an incremental payroll tax rebate of up to C$9.1 million by the Nova Scotia government if job targets are met within seven years.

The company will offer opportunities for a wide range of financial professionals, from recent business graduates to senior accounting professionals.

Butterfield Fund Services expects to locate its new fund administration centre in downtown Halifax and will begin hiring staff in January 2007.

Bank president Alan Thompson said: "Halifax is an excellent location from which to establish a base for future growth. The city offers a strong business and telecommunications infrastructure, and the many universities and colleges in the area provide a large pool of qualified young candidates from which we can recruit.

He added: "There are many historical ties between Bermuda and Atlantic Canada. With the high level of cooperation we have received from the Nova Scotia government and the warm welcome we have received from the Halifax business community, we see those relationships strengthening in the future."

A bank spokesman said the large number of qualified people in the Halifax area was the primary draw for setting up the office there rather than expanding its operations in Bermuda or elsewhere, which are limited by small populations.

An increasing number of Bermuda businesses have set up back operations in Nova Scotia in recent years, including reinsurer Flagstone Re, which has its data centre in Halifax. In addition to the availability of qualified personnel, wages and salaries also tend to be lower.

For Nova Scotia, which has experienced a brain drain to financial centres like Toronto in recent years, the establishment of the office is being framed as as a way to encourage Nova Scotians to return.

A press release from Nova Scotia Business Inc. on the deal said: "Butterfield Fund Services is providing an opportunity for Nova Scotia expatriates to return home for the kind of positions they once left for."

And in a demonstration of the importance the Atlantic province is putting on the deal was emphasised by the fact that Premier Rodney MacDonald made the announcement, saying: "This expansion is a cornerstone in the development of this sector for the province."