HSBC was the only suitor after the Bank of Bermuda, chief operations officer Philip Butterfield said yesterday.

Multinational bank HSBC has all but inked the deal to completely takeover the Bank of Bermuda, after it was announced on Tuesday that the deal ? for $1.3 billion in cash ? had been approved by the bank?s directors but was still subject to shareholder and regulatory approval. When asked if there were there other parties bidding for the bank, Mr. Butterfield said: ?They (HSBC) were the only party that stepped forward and presented an offer. There have been no others.?

Mr. Butterfield said discussions on the deal had been underway since February but that it took time to come to an agreement.

?It was very much a negotiation process, starting with the buyer indicating what they are prepared to pay. And then we, as the seller, were saying we are worth a lot more than that. It was the usual exchange and it is not an exact science. It usually ends up in a compromise but reflective of both what the buyer is prepared to pay and making sure there is concurrence on what the earnings outlook is for the enterprise.

?We spent lots of time making sure we had an understanding of what they thought they were buying and what we were selling,? Mr. Butterfield said.

Some shareholders have cited the $45 payment ? $40 from HSBC and a $5 special dividend from the bank ? they will get per share as lower than it could have been. But Mr. Butterfield said not only did he think the price was fair, he explained that the $5 dividend was not meant to make the deal more attractive to shareholders but was the extra the bank had in its money pot.

Mr. Butterfield explained that the $5 special dividend payment for each share came from surplus or ?capital overhang? the bank had on top of required capital held for regulatory purposes.

?When HSBC looked at our balance sheet all they needed to have in running the transaction was the regulatory capital so we decided that we would take the extra capital and return it to our shareholders in the form of a capital dividend. This is not any kind of financial gymnastics, it is just the reality of what our balance sheet is. And how we and they thought this transaction could work most effectively.?

As for there only being one company at the table bidding on the bank, Mr. Butterfield said it would have been impossible for the bank to open itself to a ?range of suitors?.

?An auction would not have been a viable alternative here (in Bermuda). Any buyer would have had to have been approved by Government. If we had gone to Government and said listen we have decided that we need to sell the bank, would you give us open-ended permission to negotiate with whomever, I don?t believe we would have received that. ?Government has acted very responsibly in saying yes we wish to develop the financial services sector but we intend to do that in a controlled deliberate fashion. Pursuing an auction route would not have been consistent with controlled expansion of this sector. If you have an auction you don?t necessarily have a choice as to whom you might wind up with as an acquirer.?

Mr. Butterfield added that more bids may not have meant a better price: ?I do not believe that an auction would have resulted in a higher price as everybody would have been scratching, picking, poking and prodding and that isn?t necessarily the best route to achieving an optimum return.?