Ltd.'s corporate trust business.

"Due to the volatility in major markets worldwide, assets under custody have recently experienced a downturn and, in addition, new fund launches have slowed,'' bank chairman Eldon Trimingham and president and chief executive officer Henry Smith stated in a letter to shareholders.

"Of particular concern is the Asian economic crisis that continues to depress our fund administration business in Hong Kong and Singapore. With no immediate relief in sight, we have focused our attention on expense control and selective development of new business.'' Meanwhile the growth of new business at the bank's European offices continues to be strong. On the downside concerns over the stability of emerging Eastern European markets have delayed new fund launches.

In the Americas region, the flow of new business in July and August slowed in September, again due to the volatility of markets, the letter stated.

The bank announced the opening of a corporate trust office in New York on July 1. The office provides accounting and valuation services to mutual fund clients.

"Blocks of existing business have been transferred to the New York office in order to create much needed capacity in our other offices, particularly Bermuda,'' the letter stated. "In addition, we have been able to secure significant new business from a number of fund managers located in New York.'' Treasury business benefited from the market volatility as foreign exchange business increased. The bank reported it is continuing to reorganise private client business to offer a range of wealth management services.

"Our private client business in Asia continues to be resilient despite the ongoing market turmoil, and we are pleased with the new business developed by our offices in Hong Kong, Singapore, and the Cook Islands,'' the letter stated. "Indeed, the recent problems in Asia have demonstrated the value of a substantial private client business with a diversified client base to balance the more volatile institutional segment of our overall business.'' Assets under management declined in the Bermuda and Cayman Islands offices due to the volatility in the US market. The bank hopes to use its Cayman office as a base to develop new business in Latin America.