Island's rules restricting foreign ownership in local companies, The Bank of Bermuda is proceeding with getting a secondary listing on the NASDAQ stock exchange.

Bank president and chief executive officer Henry Smith stated yesterday that the bank was "proceeding with specific steps to achieve an overseas listing''. The preparation including Securities and Exchange Commission and NASDAQ filings which are expected to be completed by the end of the year.

Investment banking firm Keefe, Bruyette and Woods has been appointed lead manager for the project to co-ordinate the marketing, timing and allocation of the initial placement of bank shares.

In June the House of Assembly voted down a private bill to exempt the bank from a rule limiting foreign ownership in the Island's three banks to 40 percent.

The bank argued the exemption was needed for it to list on an overseas stock exchange where it would be unable to control who owned its shares. The bank argues that it needs the secondary listing in order to raise capital for overseas expansion and to bring value to shareholders.

In yesterday's press release Mr. Smith was responding to enquiries about the dramatic drop in the price of the bank's shares on the Bermuda Stock Exchange, especially on Friday.

On Friday the bank's share price fell to $27.50 from $33 when an investor traded a volume of 453,652 shares in one block. The share price eventually closed Friday at $32. US-based investment bank Oppenheimer Co., Inc., which has a trading office on the Island, is thought to have done the large trade.

Yesterday the bank's shares took another hit, falling a further $2 to close at $30. Heavy trading in the bank's stock, in anticipation of the secondary listing had driven the price up to a high of $40 earlier this year.

Yesterday Mr. Smith said the recent declines emphasise the need to list overseas.

"We know of no change in the bank's fundamentals that would cause a decline in its share price,'' he said. "Rather, this trade of the bank's shares, which involved more than 450,000 shares at a price of $27.50, demonstrates what we have been saying for some time now -- that the bank needs access to a larger market that can support its shares at stable prices. It is a simple matter of supply and demand.'' He said the bank still believes that a formal exemption from the 60/40 ownership laws remains the best means of achieving a secondary listing.

"While we still believe that our private members bill was the best option, we are now considering the Deposit Taking Business Act 1998 which will be debated at the next session of the House and whether it, either independently or in conjunction with some other bill, may provide the bank with alternate means to achieve a listing,'' he said.

The Deposit Taking Act, which has been tabled, hands over power to grant exemption to the Minister of Finance thereby bypassing the need for banks to seek exemption through a private act.