The Bank of Bermuda Ltd. needs exemption from Bermuda's restrictive ownership rules if it is to compete against the larger banks overseas, the company's top executive said yesterday.

Bank president and chief executive officer Henry Smith expressed disappointment that a private act allowing the exemption had been held up by a Parliamentary committee.

He also called for a better understanding of the bank's motives for seeking the exemption during a speech to the Chartered Institute of Bankers. In recent weeks there has been a ground swell of reaction -- most positive, some negative -- to the bank's proposal, he said.

He said he was surprised when someone referred to the bank as a "monster'' in Bermuda which was attempting to get its own way.

The bank was only attempting to grow and add value for its 6,000 shareholders, he said.

He urged the community to make their concerns known so the bank could address them.

"What is it about the monster they don't like?'' he said.

And while the bank might be considered large in relation to other Bermuda businesses, it was pretty small by comparison to the giant competitors. A Nasdaq listing would give the bank the ability to raise capital for growth when needed in the competitive arena, he said.

"For me to deal with my monsters they (the public) are going to have to support their monster,'' he said.

He noted State Street, an overseas competitor to the bank, had already made inroads into the Bermuda marketplace through its alliance with the Bermuda Commercial Bank.

The bank has been stymied in its efforts to seek a secondary listing on the Nasdaq after a Parliamentary committee last week delayed consideration of a private act which would give the bank exemption from the Island's 60/40 regulation. The regulation limits foreign ownership in a local company to a maximum of 40 percent.

The delay was caused when the bank made some last minute changes to the bill to address some concerns raised by the Bermuda Monetary Authority.

The bank needs the exemption to list on the Nasdaq stock exchange, as the company would be unable to control how much of its shares is eventually held by foreigners, he said.

The bank had planned to seek a Nasdaq listing in June. The private bill has been deferred until at least May, and longer, if an election is called before then.

The listing would give the bank access to capital it needs for international development and help boost the share price. The bank is currently listed on the Bermuda Stock Exchange.

Earlier in his speech Mr. Smith said money would be needed for funding ongoing technological improvements to the bank's computer systems, and for future acquisitions.

He said the bank wasn't advocating a complete revocation of the 60/40 rule, just a selective exemption based on the company's profile. The bank had outgrown the profile of a local company.

"And for us to realise our opportunities, we must compete against the biggest and the best in the world, which demands economies of scale that we are having trouble achieving at our current size,'' he said. "Only with unfettered access to capital will the bank be able to continue its growth and remain a significant factor in Bermuda's overall economic prosperity.'' The bank has been lobbying UBP, PLP and NLP members to inform them of details of the bill.

Finance Minister Grant Gibbons, while not openly supporting the grant of exemption, has said he believes the bank has a good argument for not having the 6 0/40 rule applied to it.

PLP shadow finance minister Eugene Cox has said he was still considering the bill.

Henry Smith