cover potential loan losses. BMA chief Malcolm Williams has given the bank a clean bill of health, writes David Fox There should be no concern for the strength of the Bank of Butterfield, Bermuda Monetary Authority (BMA) general manager Malcolm Williams said yesterday.

And the Authority is satisfied that the bank has left its most recent troubles behind and is moving ahead toward a successful future.

Mr. Williams was commenting on the bank's announcement this week that for the second year in a row they were taking a charge against earnings to cover potential loan losses -- this time a charge of $33 million.

He said yesterday, "There is no cause for concern. I applaud the action taken by the bank. It was a very prudent, sensible and professional action addressing certain situations which are unfortunate. But they are quite capable of addressing them. The balance sheet is very strong and is quite capable of dealing with this problem.

"We are aware of their situation and I endorse their action 100 percent.

Banks have problems crop up from time to time. There are lessons to be learned from these situations, but banks all over the world have some problem or another. It is the required strength of such an organisation to deal with those problems that is important.

"I'm satisfied that the bank has very ably dealt with the problem, that the problem is over and they now have a clean slate from which they should prosper in the future.'' Butterfield's bank said that as a result of "past strategic miscues'' involving its UK operations, the strong success of the financial year to June 30 was being overshadowed.

The institution had underestimated its reserves needed to wind up UK mortgage operations. Last year the bank swallowed a $20.6 million charge in connection with the same UK operations, and the closure of the Singapore office.

The bank is also dipping into retained earnings by $30 million to meet newly-adopted accounting requirements for the payment of post-retiree medical benefits and other write-offs against systems costs, reconciliation issues relating to the bank's local operations and outstanding goodwill.

In addition, the bank's board is considering whether to proceed with the issuing of a $75-million subordinated debt floating rate note.

BMA general manager Malcolm Williams