seeking protection from taxation and/or litigation losses, says a Bank of Butterfield senior vice president.

Mr. Kenneth Morgan, senior vice president, trust, speaking at a Chartered Institute of Bankers (Bermuda chapter) luncheon yesterday cited an article published in Forbes this week entitled "The New Refugees -- Americans Abandoning Their Citizenship,'' as indication of a potential market for Bermuda's trust services.

"In 1982, a year after former President Mr. Ronald Reagan lowered US taxes, not one American gave up US citizenship. In 1993, 306 persons expatriated. A 55 percent estate tax compared to zero in many places certainly concentrates the mind, and while Bermuda cannot offer passports and citizenship to these clients we can offer our trust and corporate services for their assets as they move to Ireland or England or St. Kitts,'' he remarked.

"Bermuda can and should feature prominently in their tax planning.. .I feel excellent business is there for us,'' he added.

The Trust Companies Act, 1991, opened up the Island for local and exempt trust companies while the Trust (Special Provisions) Act 1990 allowed purpose trusts, or trusts for the benefit of something other than individuals or charities.

"A major US bank has estimated that private wealth around the world now totals some $9.6 trillion with $2.1 million already offshore. That leaves a fair amount to direct marketing efforts toward and of course, these numbers do not include other substantial areas of potential such as pension funds,'' he added.

Exempted trust companies are permitted to act as trustees of pension trusts for persons or companies not resident in Bermuda.

Amendments earlier this year to the Island's Conveyancing Act clarified how money transferred to trusts should be treated if the money was moved to avoid paying a creditor.

The difficulty with developing asset protection trusts is determining "how far you go with your laws to protect trust assets'' against potential creditors, he noted.

Mr. Anthony Ginsberg, publisher of Offshore Outlook, has said creditors in Bermuda have a two-year window to access asset protection trust money plus a six year statute of limitations -- some jurisdictions lack the latter, he explained.

Those countries are not likely to survive in the asset protection trust market, alluded Mr. Morgan.

"Should the offshore jurisdiction help (the client who owes creditors) achieve that purpose? If it does, what damage do they do to their own future business prospects and how will the international community and media view their efforts?'' Mr. Morgan asked.

A minimum share capital of $250,000 is prescribed for trust companies in Bermuda and they are required to submit audited accounts to the Bermuda Monetary Authority.

"Increasing taxation in the more sophisticated economies and a growing awareness of the proper and legitimate use of the offshore business all point to a bright future for the trust and finance industries in Bermuda,'' Mr.

Morgan said.

But, he added, "we continue to fine tune the framework of our trust business to encourage clients at the upper end of the scale to look at Bermuda.'' Mr. Morgan is also the president of the Bermuda Association of Licenced Trustees, an organisation created because of the increase in trust companies on the Island.

As well as the Island's three banks, trusts are set up by companies like Barclays Trust, Coutts & Co., NM Rothschild, Lombard Odier, Royal Trust, and Schroders International Trust Company Ltd.

Mr. Kenneth Morgan.