has been a key problem.

In yet another change for the Bank of Bermuda's New York subsidiary, it now plans to withdraw from the deposit taking and lending business and concentrate fully on its trust, custody and other non-banking, administrative services.

About six of the 23 staff will lose their jobs. President and CEO, Henry B.

Smith, said, "Banking competition is fierce in the US market. While we have had some success in New York in the past, the profits have not been sufficient to justify the very significant capital investment we would need to make in the future to remain competitive.

"Instead, we have decided to concentrate on our core international businesses of trust, custody and related administration.'' The bank has 23 employees in the New York office and Mr. Smith indicated that figure was unlikely to go down. He said, "Some positions will be made redundant but it is expected that they will be off-set by growth in the other business areas.'' Chairman & president of Bank of Bermuda (New York) Ltd., Edgar C. Felton, said by telephone, "We're trying as best to keep as many as we can. But we will lose about half a dozen people.

"We don't know exactly how many people we will need for the new positions and it will take some time to know that. But we will always have 23, and eventually more, working here, as we grow gradually.'' Bank officials hope the new role for the New York subsidiary will fit more comfortably. The New York office of the bank was strategically opened as an "Edge Act'' bank in 1984 and took on its present form as a New York State chartered bank with full trust powers in July 1989.

Mr. Felton said, "In 1989, the bank decided to have more opportunities for the subsidiary by converting it into a full US bank, a New York State chartered bank. But in the period since then, it has become clear that this is a very well-banked market, and the amount of capital required to be competitive with the kinds of clients that the Bank of Bermuda deals with internationally, is quite a bit.

"And the return, because of the competitiveness of the market, really is difficult to achieve, relative to opportunities elsewhere in the world for the bank.

"So we are winding down the businesses that do require most of that capital and sticking, at the same time, to the businesses which are really the core businesses of the larger bank.

"The New York subsidiary has capital of $21 million. That is small in the New York market, and represents about five percent of the parent's capital base.'' The subsidiary moved from Park Avenue a little over a year ago to the old GE building on Lexington Avenue, which is now owned by Columbia University.

Two years ago the subsidiary wound up its role as the New York correspondent and dollar clearer for securities and payments for the whole group.

At that time, clearing a daily volume of between one and two billion dollars a day, the bank had a staff on Park Avenue of about 40. It was decided at that time that the key function could be handled more cost effectively by out sourcing it to a larger city bank.

Mr. Felton said, "In New York, one of the keys to success is to be able to adjust to the marketplace. Changes occur and the need to change occurs much more rapidly than 20 years ago. "It is one of the strengths of the bank that we are flexible enough to change.'' Henry Smith