Butterfield Bank’s Parent Branch in Bermuda gets New President while feeling a $214 Million Loss
What was the former Mutual Bank in Barbados became Butterfield Bank in the late 90’s, not many folk realised immediately that it was the franchise of a Bermuda based fiscal service. Like the erstwhile Shakey’s restaurant (which, like MacDonald’s here in Barbados, also did not last too long), this was a branch organisation which managed to slip under the radar of ‘Franchise Watchdogs of Barbados,’ i.e. the Unions and local counterparts.
Well, according to the Bermuda Sun, as one President opts for retirement and another assumes the mantle of leading the group, it appears to be trouble in Paradise as a loss of hundreds of millions is recorded and seeks a bailout close to half a billion dollars from abroad, and one of First Caribbean International’s parent companies is part of the stimulus initiative;-
The Bank of N.T. Butterfield & Son Limited (“Butterfield” or the “Bank“) announced today that funds affiliated with The Carlyle Group (“Carlyle“), Canadian Imperial Bank of Commerce (“CIBC“) and other institutional investors have invested $550 million in new Butterfield equity. Other investors include the Wellcome Trust, The Bermuda Government Pension Funds, Julian Robertson, and Goshen Investments, LLC. As part of the transaction, existing Butterfield shareholders will have the right to participate in a rights offering, proceeds of which will be used to buy back some of the newly issued shares.
The new equity capital is part of a comprehensive plan to increase capital and remove risk from the Bank’s balance sheet. In addition, the new capital provides flexibility to restructure Butterfield’s investment portfolio, decrease volatility in the Balance Sheet, and maintain capital ratios well in excess of regulatory requirements.
The transaction closed 2 March 2010.
Butterfield also announced that Bradford Kopp, most recently Executive Vice President and Chief Financial Officer, has been appointed President, Chief Executive Officer and Director, succeeding Alan Thompson, who has retired from the Bank.
Butterfield today reported an audited net loss for the full year ended 31 December 2009 of $213.4 million, or $2.34 per fully diluted share, compared to audited net income of $4.8 million, or $0.05 per fully diluted share, in 2008. These losses resulted from a write-down of primarily mortgage-backed securities and substantially higher commercial loan loss provisions. Butterfield may incur a further loss in the range of $150 million to $175 million in the first quarter of 2010 related to the investment portfolio restructuring, at which point the balance sheet would be substantially de-risked.
As result of the activity, shares were suspended in Bermuda’s Stock Exchange, but so far there’s no indication as to if the shares are circulating again. No mainstream media in Barbados have touched on this yet, not even as to what these developments will do to the branches here…