the Island's public funds.

The announcement was made via a newswire service in New York yesterday, on behalf of the bank. Minister of Finance, Eugene Cox, last night said: "This is good news for Bermuda.'' The Bank of New York said last night that they had been involved with the Bermuda Government since 1995 as one of several providers, but had signed a sole deal in November, which is why they had issued a release yesterday.

But Shadow Finance Minister Grant Gibbons said the Government should have considered a local Island bank to be the sole custodian of public funds.

The Bank of New York has recently been under investigation from the US government over allegations that the Russian mafia laundered money through the bank. Dr. Gibbons said it "could be an unfortunate choice'' because of the investigation and the sensitivity of money laundering to offshore jurisdictions.

But Minister Cox said that they were the best institution for the job and had met all the Government's criteria for high standards and would save the Island money by having a single custodian.