Son Ltd. a deposit rating of "A3'', and a financial strength rating of "D plus'' because of the company's highly liquid, low-risk balance sheet and its modest, but predictable, core profitability.

"Recent provisions and restructuring expenses have hurt bottom line performance,'' Moody's stated. "Nevertheless, the bank has shown improvement in fundamental earnings, which has helped in maintaining a strong capital position.'' Moody's maintained its "A3'' rating despite a total of about $50 million in special charges against the bank's net income over the past two financial years.

The agency lists the bank's strengths as its "good position'' in Bermuda and Grand Cayman banking, and redefined strategies, combined with the write-off of discontinued businesses.

The challenges facing the bank are its domestic banking which "generates high overhead because Bermuda is an expensive environment in which to operate and also because clients demand a high level of service,'' according to the report.

The "D plus'' rating sits between the agency's "C'' and "D'' classifications. A "C'' denotes a bank with "good intrinsic financial strength'' and is "typical of institutions with valuable and defensible franchises''.

A "D'' denotes a company with "adequate financial strength'' which may be limited by vulnerable or developing franchises, weak financial fundamentals, or an unstable operating environment.

Butterfield president and chief executive officer Calum Johnston said it was his understanding the "D plus'' was given because of the management changes that had occurred over the past year.

"We believe that we have a strong management team in place now,'' he said.

"Given that we expect our rating will improve next year. We have had a hard year and we are looking forward to this year being a good year.'' Early in 1997 the bank began a restructuring process, which included getting out of the UK loan market, and closing down its Singapore office. Then John Tugwell quit after only six months on the job and was replaced by Mr. Johnston in December.