Butterfield Bank has now opened its first fund service office in North America with a dozen employees.

By the end of this year the new office in downtown Halifax is expected to employ 40 people for Butterfield Fund Services and may eventually may have as many as 400 staff servicing the hedge fund industry from the Nova Scotia base.

Providing jobs for Canadians comes with a multi-million dollar incentive from the province's government, which is reported to have agreed an incremental payroll tax rebate of $7.7 million if job targets are met.

A good supply of graduates from local universities able to step into fund service careers, being in the same time zone as Bermuda and having easy access to and from Bermuda are further plus points that attracted the bank to the northern city.

Butterfield Bank is one of a number of Bermuda-centred organisations branching out in Halifax, reflecting the city's increasing reputation as a regional financial centre.

"We are very pleased with our decision to base Butterfield Fund Services' first onshore North American office in Halifax. We look forward to playing an active role in the local business community and working closely with academic institutions in the area to continue to recruit and train fund administration professionals," said Sylvian Lacousiere, managing director of the new company Butterfield Fund Services (Canada) Limited.

BFS Canada will provide fund accounting and administrative services to managers of hedge funds and alternative investments from its Halifax office.

As has previously been reported by The Royal Gazette, no jobs in Bermuda or in the bank's other business centres will be lost as a result of the creation of the Halifax office. The Butterfield Bank group has been given an incremental payroll tax rebate of up to $7.7 million (Canadian $9.1m) by the Nova Scotia government if job targets are met within seven years.

Mr. Lacousiere is a chartered accountant and chartered financial analyst with experience in fund administration. He has worked with Butterfield Bank for seven years, five of which were as part of the Butterfield Fund Services team in Bermuda and for two years in a consulting capacity.

Before that time he was employed by Deloitte.

Frank Sebestyen, senior vice-president and head of Group Fund Services at Butterfield Bank Group, said: "Since we announced our decision to locate in Halifax back in November, we've enjoyed an extremely high level of co-operation from the many local firms who have assisted us with establishing and outfitting our new office. We are very pleased with the warm reception we've received from the Halifax business community."

Another spokesman said the move reflected the bank's intention to tap into the demand for fund services in North America by having a physical presence. He added: "Halifax is a relatively low cost North American location. Halifax has got a relatively large number of universities that turn out graduates able to work in fund services.

"It is in the same time time zone as Bermuda, which makes administration easier between here and there and it is easy to get to from Bermuda for our executives. There are also the development incentives from the Nova Scotia government."

Butterfield Fund Services provides administrative services to over 800 funds world-wide.

The bank is one of five financial firms with links to Bermuda which have chosen to set up offices in Halifax.

Last December West End Capital Management, a fixed-income fund manager affiliated with billionaire investor Warren Buffett, announced it would set up an office with 75 people in Halifax. Hedge fund administrators Citco Group and Olympia Capital have also unveiled plans to open Halifax offices and Marsh Incorporated, the insurance services arm of New York-based Marsh & McLennan Companies, has announced it is opening an office in the city to oversee captive solutions.