and real estate operations of the Bank of Bermuda and L.P. Gutteridge signals the creation of the third highest capitalised financial institution in Bermuda.

Mr. Donald Lines, president and chief executive officer of the Bank of Bermuda and Mr. David Gutteridge, president of L.P. Gutteridge, yesterday announced the merger of the real estate divisions and mortgage and finance companies of both LPG and the Bank of Bermuda, to form a new independent company.

The new company will be called Bermuda Home. It will have $470 million in assets and 50 percent of the mortgages on the Island.

Bermuda Home will have a subsidiary company called Bermuda Realty. The real estate activities will combine LPG's sales and property management operations with the bank's real estate operations.

Yesterday's announcement -- which came after just six weeks of secret talks -- stunned the rest of the real estate and banking world and could signal the start of a shake-up of the sector.

Directors of Bermuda Home include Mr. Paul Leseur, who is deputy chairman, and Mr. Arthur Haycock, a member of the Bank of Bermuda's executive, who will take the role of president and chief executive officer.

The chairman of Bermuda Realty will be Mr. J.J. Outerbridge, Jr., and the president will be Mr. Wayne Jackson.

Mr. Lines and Mr. Gutteridge assured customers of the Bank of Bermuda and LPG that the merger would not change any current arrangements regarding mortgages, loans or deposits.

Business will continue as usual until June 1, 1994, with the 80 staff affected by the merger continuing to work at their present locations. At this time, Bermuda Home is expected to be listed on the Bermuda Stock Exchange.

The company, which expects to have $25 million in capital at the time of the merger, also plans a $15 million rights issue.

See Business -- Page 9.