All three Bermuda banks have had their financial strength ratings hiked this week by the US ratings agency Moody's.

The credit rating's service, which is recognised around the world as a guide for buying stocks, has hiked all three banks into the "C" category which is allocated banks around the world which "possess adequate intrinsic financial strength".

Bermuda's largest bank, Bank of Bermuda has gone from a C to a C plus, Bank of N.T. Butterfield & Son Ltd. from D plus to C, and Bermuda Commercial Bank Ltd has been up graded from a D to a C minus.

All three banks were listed by Moody's in 1997 and have not had their ratings changed in that time, according to the Moody's web site.

The new ratings will be a boost to the banks, which have now all received exemption from the 60/40 ownership rules which allows more foreign investment. Their stocks can now be bought by any company or investor from any country without restrictions.

The agency's ratings are used as a guide by buyers and investors to gauge the worth of an- institution against another.

It said the ratings reflected: "An opinion of a financial institution's intrinsic safety and soundness and can be understood as a measure of the likelihood that a bank or other financial firm will require assistance from third parties, such as owners or financial institutions."

Moody's said of the C Financial Strength rating: "Typically, they will be institutions with more limited but still valuable business franchises. These banks will display either acceptable financial fundamentals within a predictable and stable operating environment or good financial fundamentals within a less predictable and stable operating environment."

The upgrade is particularly significant for Bank of Butterfield and Bermuda Commercial Bank, who were previously listed in the "D" category which "display modest intrinsic financial strength, potentially requiring some outside support at times. Such institutions may be limited by one or more of the following factors: a weak business franchise; financial fundamentals that are deficient in one or more respects; or an unpredictable and unstable operating environment."

The changes come after Moody's changed the way it categorised or scaled its ratings in February, and the announcement of the upgrades was made this week by Moody's.

The categories were expanded from 9 to 13 and range from E to A with minus and plus symbols for D, C and B.

The ratings refinements are intended to permit greater differentiation among the relative financial strengths of financial institutions globally, the ratings agency said.

But it added the ratings refinements do not reflect any change in the credit profile or financial strength of the banks.

Richard Ferrett, chief financial officer of Bank of Butterfield said: "The bank is already on positive watch from Moody's and it is pleasing to note that our financial strength rating has now been raised two levels from D plus to C. Banks rated C by Moody's possess good intrinsic financial strength with valuable and defensible business franchises. The upgrade reflects continued recognition of our earnings growth, coupled with our strong capital position and low-risk balance sheet."