angrily to what he has called a "negative and sensationalist'' story in The Royal Gazette on Friday.

The newspaper reported in that edition that Mr. Henry Smith had implied that the Bank of Bermuda could quit the Island at a question and answer session on Thursday.

Yesterday Mr. Smith said in a Letter to the Editor, which was sent as a rebuttal to all media, that he registered his "extreme dismay'' at the front page story headlined "Bank may quit Island''.

He said: "It is totally inaccurate to suggest that the Bank of Bermuda `may quit the Island' or that my speech was an attempt to `throw down the gauntlet' to Government to push for a resolution to our 60/40 exemption request.'' He added that he was misquoted and his remarks taken out of context.

In a reply to all media, the acting Editor of The Royal Gazette Kyle Hunter said he stood by the story and said the quotes were vetted by the bank.

Bank CEO attacks `negative' story Mr. Smith said the newspaper chose to ignore his speech entirely and other questions put to him.

He said: "You chose only to report in a negative and sensationalist fashion on my response to the 60/40 question, misquoting me and taking my comments out of context in a misguided effort to portray the bank as threatening Government and/or the Bermuda community.

"This kind of reporting is irresponsible and potentially extremely destructive.'' In a reply to all media, the acting Editor of The Royal Gazette defended his stance.

"It is the newspaper's job to find the most salient point in any event and, clearly, any suggestion of the bank `restructuring' is of importance to all Bermudians.

"To say that the Gazette misquoted Mr. Smith is a difficult pill to swallow as the reporter sent over the quotes to be checked with Mr. Smith that they were correct. They were approved by the bank.

"It is also incorrect to say that a question and its answer were taken out of context. Mr. Smith was asked a question, to which he replied. We reported the matter. This is not taking the matter out of context.

"It is of vital importance to Bermuda, its economy and its residents what happens to the bank. If there is any suggestion of the bank relocating or leaving, it has to be addressed. Mr. Smith still has not stated clearly what he meant by `restructuring' and we would welcome his views.'' On Friday, Finance Minister Eugene Cox backed Mr. Smith and said the Bank of Bermuda was continuing to work with the Government on looking at the 60/40 ownership issue.

And he told The Royal Gazette that Mr. Smith telephoned him on Friday and claimed his comments had been taken out of context.

Mr. Cox said: "I spoke to Mr. Smith and, knowing from his involvement and participation in a committee under my chairmanship looking at financial services in the short term, I would find it very difficult for him to take the negative views that I have heard.

"I am satisfied in my own mind that he is continuing to work with us and support the initiatives Government has in hand.'' Mr. Smith's reference to the bank possibly leaving the Island if Government did not change the 60/40 ownership rules came in a question and answer session after he gave a speech to Women in International Trade at Bermuda International Yacht Club.

Mr. Cox added: "He feels his comments have been taken out of context. I've read his speech and I know when I make a speech it's better to stick to it rather than get into questions where it can get confusing.'' The full text of Mr. Smith's letter will appear in tomorrow's paper.