Bank attempts to ease concern over secondary listing
The Bank of Bermuda Ltd. says the local community should not worry that the bank is about to break free of its commitment to the Island with its proposal to seek a secondary listing on an overseas stock market.
The bank argues that a secondary listing would allow it to continue to grow and give it access to the capital needed for growth. The Bank of Bermuda is currently listed only on the Bermuda Stock Exchange.
The bank is seeking to get an exemption from the rule limiting foreign ownership in local companies to a maximum of 40 percent, a necessary step to a secondary listing. The bank plans to submit a private member's bill to the legislature, which if passed will allow the exemption.
"We know there is concern that increased foreign ownership of the Bank will mean less commitment to the island,'' the bank stated in a letter to shareholders. "But the reality is really quite the opposite. First, the fact is that we must continue to grow to remain competitive. Stagnation would put Bermudian jobs at greater risk, not less. It would also put at risk the amount the Bank contributes to the economy -- presently about $115 million per year...Second, the capital to fund that growth cannot be acquired in Bermuda.
There is a limited pool of capital available locally, and that is needed for other domestic purposes.'' The bank also argues Bermuda's current ownership rules provides no protection from foreign control of the bank. Control could be bought by owning between 15 to 20 percent of the shares.
Other rules the bank has in place and plans to include in the private members bill would be better protection from any takeover attempt, Chairman Eldon Trimingham, and president and chief executive officer Henry Smith jointly stated in the letter.
The bill would mandate that at least 60 percent of the board members remain Bermudian, and would restrict individual ownership to a maximum of 10 percent.
The bank stated the secondary listing would also help increase the price of the stock, which it believes is currently undervalued.
