One of the rescuers of Butterfield Bank has hit trouble in the Caribbean.

Canadian Imperial Bank of Commerce (CIBC) and two other Canadian banks have written off more than $1 billion in the region since the recession hit.

And yesterday David Hills, a business consultant and a columnist for The Royal Gazette, said trouble in the Caribbean should be a warning to Bermuda — and may even affect banks on the Island.

Mr Hills, a chartered accountant who owns Small Business Advisors, was speaking after The Canadian Globe and Mail highlighted Canadian banking woes in crisis-hit Caribbean countries like Barbados and the Bahamas.

He said: “I thought it was quite instructive.

“You think we have a problem and we certainly do — but what it says down there is that it can get worse if we don’t take action.

“We have great difficulty in deciding what to do and working towards that goal.

“I read about it thought that people need to understand how things can go down in Bermuda.”

CIBC helped recapitalise Butterfield Bank with a $150 million injection in 2010, for which it got a 22.5 per cent stake in the Bermuda institution.

The investment was part of a $550 million rescue package for the bank, hit by the recession and toxic loans and mortgage-backed securities. Carlyle Group also bought a 22.5 per cent stake in Butterfield.

Toronto newspaper The Globe and Mail said CIBC, which owns FirstCaribbean International Bank, might pull out of the region altogether.

Mr Hills said that the International Monetary Fund had ordered Barbados to slash public spending in return for financial assistance — leading to the loss of 3,000 public-sector jobs last year.

He added: “You just look at it and say we don’t want to go there.”

Mr Hills said his guess was that CIBC’s aim when in invested in Butterfield was to ultimately buy out the Carlyle Group’s stake.

But he added: “Their problem with FirstCaribbean might make that process a little slower than it might have been.”

CIBC bought out British bank Barclay’s share in FirstCaribbean in 2006 for $1 billion.

But by 2011, CIBC wrote down its investment in the Caribbean bank by $203 million and later carried out a further $420 million write down in FirstCaribbean’s goodwill.

Now more than half CIBC’s total gross impaired loans — ones that show signs of trouble — are Caribbean-based and the Canadian bank has warned more writedowns could come.

And a global crackdown on tax evasion — including the 2010 US Foreign Account Tax Compliance Act, which beefed up reporting standards for offshore assets — has made the area less attractive for investment.