The conditional merger agreement between Bermuda Commercial Bank Ltd.'s new owners and First Bermuda Group Ltd. has lapsed, the bank announced last night.

But talks aimed at achieving the merger will continue, BCB chairman Michael Collier confirmed.

Permanent Investments Ltd., who acquired a controlling interest in BCB in April, agreed to buy FBG later the same month.

BCB's statement read: "This agreement contained a termination date of 30 June, 2010 and as the agreement has not been completed by this date it has lapsed. Permanent, BCB and FBG will continue to discuss a possible amalgamation and a further announcement will be made to shareholders in due course if appropriate."

The three FBG directors appointed to the BCB board in anticipation of an amalgamation — Jeff Conyers, Eugene Bean, and Nicholas Warren — have resigned from the BCB board following the lapse of the agreement.

BCB chief financial officer Greg Reid has also been reappointed to the BCB board.

Speaking with The Royal Gazette, Mr. Collier, who is the chairman of Permanent as well as BCB, stressed that the merger deal was still very much on the table.

"Basically FBG have a number of projects going on at the moment," he said. "Once those projects are dealt with, we will then resume the discussions on a possible amalgamation."

He said performing due diligence was time-consuming, particularly in today's business environment and added: "Permanent Investments continues to be interested in trying to find a satisfactory way to move forward."

Permanent announced in April that it already had the support of the necessary majority of FBG shareholders for the merger deal and said no redundancies among BCB's workforce of 38 and FBG's staff of around 20 were planned.

Management of both companies said they saw synergies that would make the combined entity a force in the local banking sector. FBG has around $200 million in deposits and a loan book of around $170 million.