Butterfield Bank recorded a $16.5 million net loss during the second quarter of 2008, as it took a $50 million charge on investments hit by the credit crisis.

The loss, which was down from a profit of $35.9 million for the same period last year, was due to unrealised losses on two credit support agreements with a "related party", totalling $27.7 million, and a realised loss of $23 million on one holding in the group's held to maturity investment portfolio.

The bank has also reached an agreement to merge its international fund services businesses with those of Fulcrum Group to form Butterfield Fulcrum Group, an international fund services provider with operations in nine countries and assets under administration of approximately $100 billion.

Alan Thompson, president and CEO of Butterfield Bank, said: "Following successive quarters of sustained growth over a number of years, this quarter's results are disappointing.

"As reported to shareholders in our 2007 Annual Report and our Q1 2008 earnings release, the group has provided assistance through credit support agreements to a related party.

"Those agreements, along with the write down of one holding in our 'held to maturity' portfolio that suffered permanent impairment, resulted in a loss for the quarter."

See tomorrow's Royal Gazette for full coverage