offering, including a discussion of the Island's smallest bank's move to attract significant growth.

They will seek to raise $13.5 million by this month launching the rights offering that will double its capital base.

The Bank of Bermuda has been retained as arranger and manager in developing and structuring the rights offering. Their subsidiary, Bermuda International Securities Ltd. and First Curacao International Bank (FCIB) N.V. will be the underwriters.

There will be 2,850,072 new shares issued, if all the rights are exercised and 1,625,036 new shares will be issued if all the subscription rights attached to the warrants are exercised, including 200,000 new shares which will be issued upon exercise of all the subscription rights attached to the FCIB warrants.

BCB will pay an estimated $750,000 in fees and expenses for the rights issue.

The underwriters will receiving an arrangement and management fee of 1.25 percent calculated on the maximum gross offering proceeds ($14,250,360) for their role in the arrangement and structuring of the issue, the preparation of the prospectus and the general management of the rights offering.

The fee will be deducted from the gross offering proceeds and shall be split between the managing underwriter and underwriter on a pro rata basis according to each party's respective underwriting commitment.

In addition, the underwriters will receive an underwriting fee of two percent calculated on the maximum gross offering proceeds ($14,250,360), deducted from the gross offering proceeds.

Pursuant to an underwriting agreement, the wholly-owned subsidiary of the Bank of Bermuda Ltd., Bermuda International Securities Ltd. (BISL), will underwrite 60 percent of the rights offering, subject to certain regulatory approvals.

FCIB will underwrite the remaining 40 percent.

And, subject to regulatory approval, FCIB will undertake to subscribe for any units not taken up in the rights offering, through a sub-underwriting agreement with BISL.

The rights offer comes on the heels of the bank's first ever half year profits of $578,000, and two years after a 30 percent stake and effective control of the bank changed hands. The shares were sold by Barclays Bank Plc to FCIB two years ago.

Shareholders will be offered one right for every share held at May 18. One right entitles the shareholder to acquire one $10-unit, consisting of two shares and a warrant. Each warrant entitles the holder to subscribe for one new share at a fixed price of $7.50 at any time between May 30, 1997 and May 31, 2001.

The bank's history includes the fact that prior to the scaling down of BCB's retail operations at the end of 1991, there was a net loss of $1,885,000 in the previous year. The loss resulted from exceptional costs of operations combined with increases in loan provisions of some $2 million.

Net interest and other income, such as fees, commissions and investment income combined for total revenue of about $6.6 million in 1991. It is projected that the combined revenues for 1995 to the end of September will be about the same.

But expenses for the current fiscal year are expected to be about $3.6 million less than expenses in 1991.

In 1994, the company spent more than a million dollars for new systems, but controlled costs and posted a profit of $1,041,000.

The rise in net interest back to 1991 levels, the bank said, was as a direct result of increased client deposits, which grew by 10 percent, to an average of $190 million during the six month period to March 31.

The bank projects that increased deposits will result in an overall increase in interest earned of 27 percent.

Somers loan and deposit book has seen a marked reduction in loans in default.

The level of business with the Portuguese community in Bermuda has continued to increase with a marked impact on the net income of Somers.

The net interest earned by Somers for the first six months of this year is $647,000 and is expected to increase by $610,000 by year end, a 24 percent increase on the prior financial year.

BCB releases rights offering prospectus Lower foreign exchange earnings occurred as a result of uncertainty in world currency markets.

Over the last six months fee income has increased in commissions from ledger fees, commitment fees on loans and overdrafts, penalty fees on broken deposits and wire transfer charges. The increase in commission income projected for the 1995 year is 20 percent.

Custody fees and investment handling and collection fees decreased slightly in the first six months, but are expected to rise to $776,000 by the end of the fiscal year, 11 percent up.

The bank is increasing clients in its global custody division and the trust business is expected to gradually grow.

There are also signs of growth in fee income for corporate management, and an increase in the number of companies and funds under management. Earnings are expected to rise for the year by 36 percent to $256,000.

The bank's targeted business development has meant a substantial increase in assets under administration over the last five years, growing from less than $1.5 billion in 1991 to nearly $4 billion projected for the end of fiscal `95.

The bank's strategy for long term growth is indicative of their intention to take a leading niche position within the provision of financial services in the offshore market.

The bank will exploit the opportunities inherent in their new agreement with Merrill Lynch Asset Management to establish a local joint venture asset management company.

BCB is also actively marketing itself in the mutual fund industry, expecting that this sector will become more and more important in terms of the contribution to future earnings.

A strong emphasis is also being placed on developing computer technology, as evidenced by BCB Global On-Line Data (GOLD), providing up to date account information on demand and processing all client instructions on their accounts from anywhere in the world.

The bank's management believe BCB GOLD is particularly useful for captive management companies who maintain a number of different accounts for their clients.

BCB (Mauritius) Ltd. was opened in November, the bank's first overseas subsidiary, a custodial and trust company in Mauritius aimed at facilitating access for clients of the bank to Asian and African equity markets.