Butterfield Bank boosted its Bermuda Dollar base rates to five percent on Monday in reaction to rising rates in both the US and Bermuda. In announcing the increase, Richard Ferrett, chief financial officer, said Butterfield Bank had maintained its Bermuda dollar base rate below the competitive market for some time this year in spite of making significant increases to its Strata savings rates in February.

?In the present climate of continuing rising rates in both the US and Bermuda it is now appropriate to bring our rates in line with other banks in Bermuda. We naturally remain strongly committed to continuing to provide our customers with highly competitive rates for both loans and deposits,? he said in an statement yesterday.

The base rate is the minimum interest rate at which banks will lend money to customers, but generally banks will lend money at a fixed percentage above the base rate, depending on the term and risk of a loan.

The move brings the rate in line with the Bank of Bermuda. A spokeswoman for that bank said yesterday there are no plans to increase its base rate for personal customers above five percent. ?Bank of Bermuda determines its base rate independently based on a number of factors including the United States federal funds rate, set by the Federal Reserve Board, as a benchmark to remain competitive and provide the best possible service to our customers,? the spokesperson said.

Capital G said it does not publish a base lending rate, but prices its credit facilities on absolute (variable) terms based on market conditions and the bank?s cost of funds. It increased its lending rate on April 12.

?Our cost of funds have been impacted by the 15 consecutive Fed Rate increases totalling 3.75 percent since June, 2004, however the bank has chosen to only increase its lending rates by 0.75 percent over the same time frame,? said Ian G. Truran, senior vice president and head of credit risk management.