Bank of Bermuda chief executive officer Philip Butterfield said yesterday that stress tests on banks that have been requested by the Island's financial regulators are "essential".

The Bermuda Monetary Authority announced in its 2009 Business Plan that in response to the global financial crisis, it intended to ask banks to carry out stress tests "simulating a range of potential scenarios, including a severe domestic economic downturn".

"Having these stress test exercises at this time is an essential undertaking," Mr. Butterfield said yesterday. "We are living in perilous financial times and it's important for any regulator to be ahead of the curve and test the strength of financial organisations.

"I applaud the work the regulator has done and I look forward with interest to their statement on the tests."

The Island's financial services sector has been impacted by the worldwide economic turmoil and is seeing a growing number of job cuts.

Asked whether the Bank of Bermuda was reducing its workforce, Mr. Butterfield said: "You have to continuously examine the way you conduct business to the extent that we are in a period of economic decline, or at least remaining at the status quo.

"It's always imperative that you look at the cost of doing business, and in our business a major cost is people."

He added the Bank was always looking for ways to do business more efficiently, part of which was encouraging its staff in their professional development.