Capital G Bank is working with the Bermuda Monetary Authority in a bid to have a central, independent sorting office set up for clearing the Island's cheques.

Sarah Farrington, the bank's chief executive officer, said that with the opening up of the banking sector in Bermuda, there was a need for an independent and impartial clearing office which would sort all cheques on the Island.

"We have no centralised clearing system and that is what we need if we are to open up the sector," she said.

Ms Farrington said before Capital G Bank was granted its banking licence in October 2001 there had been a long period where there had been no new banks.

So the only clearing system that had been set up was a privately owned company set up jointly by Bank of Butterfield and Bank of Bermuda ? Proserve, which clears cheques mutually for Bank of Bermuda and Bank of Butterfield and is privately owned 50/50 by both banks.

Ms Farrington said her bank had experienced difficulties in clearing cheques because it had to go individually to the banks to agree to get cheques cleared ? and any other bank set up on-Island would face the same difficulties and inconsistencies.

"What we need is a proper centralised clearing facility for cheques," she said. "At the moment there are no rules universally applied to ensure everything is done properly. We have tried to negotiate the best we can. There has been cooperation but there is no incentive for them (the other banks) at the moment."

In other countries central banks act as a central and independent clearing facility for banks, and while Ms Farrington said she was not asking for a central bank to be set up, some kind of independent body was needed which could be created in line with other nations and backed by the BMA.

"In recent months we have put together a committee looking at clearing facilities and providing a proper centralised clearing facility for Bermuda," she said.

And she said that the proposed takeover of Bank of Bermuda by HSBC would not necessarily affect the processing of cheques, but the new owners may decide to implement a different set of systems should they take over the bank, adding to the impetus for change.

"Any company coming to Bermuda to set up a bank, would, at the moment, have to go around each bank and work out something with each bank individually," said Ms Farrington.

And she said that this system of clearing bank cheques could be changed now that the BMA has taken an interest in the matter and had taken the first steps to resolve the issue.

The Gibbons Deposit Company was originally set up as an in-store deposit taking more than 60 years ago. It became a licensed deposit company in 1974, but became a bank in 2001 and while it has access to bank networks, it plans to keep its focus on the local market.