The Bank of N.T. Butterfield and Son Ltd. has allied itself with the giant Chase Manhattan Bank to better compete with the big banks in providing offshore global custody services.

Bank of Butterfield will use Chase Global Investor Services for multi-currency settlement and reporting for clients who have cross border investment portfolios.

Butterfield president and chief executive officer Calum Johnston said the bank decided to move away from using a number of global custodians and consolidate its services with Chase.

The bank's Bermuda, Cayman Islands, Guernsey and Hong Kong offices were using a variety of vendors for global custody services.

Global custody refers to services the bank provides for wealthy individuals, institutions and mutual funds that have investments in a number of countries.

"We believe that in entering into this important relationship the Bank of Butterfield has aligned itself with a proven industry leader,'' he said yesterday.

"Chase has a fully automated infrastructure providing great efficiency and economics of scale.'' The bank has worked with Chase in the past. Chase has provided correspondent banking and client management services to Butterfield.

Chase Global Investor Services is one of the world's largest providers of custody and related services.

The Chase subsidiary has about $5.2 trillion in assets under custody. The Bank of Butterfield has about $17 billion under administration.

Mr. Johnston said the bank decided to choose Chase because it was expensive to provide such services on its own in competition with the larger banks. Chase Securities managing director Justin Ramsteck said the company was spending about $250 million this year on its global custody services.

Earlier this year Bermuda Commercial Bank forged a similar partnership with State Street Bank & Trust Co. The Boston-based bank has about $3.9 trillion in assets under custody.