Shadow Finance Minister Bob Richards gave his full support to Government's financial backing of Butterfield Bank saying the move was necessary to bolster public confidence in the banking sector.

The United Bermuda Party MP said if he had been in the shoes of Finance Minister Paula Cox, he would have done the same thing.

Support for Ms Cox also came from Bermuda Employers Council president Graham Redford, who said the situation showed that Bermuda was not immune to the worldwide economic crisis.

"Public confidence and stability of the financial markets and the banking sector are of paramount importance," Mr. Richards said.

"People must continue to have confidence in banks. The reasons the Minister gave for this action were totally valid."

The bank had needed the capital to keep up with requirements of financial regulator the Bermuda Monetary Authority to ensure it remained strong even in a severe downturn, Mr. Richards added.

He did not believe Butterfield customers on the Island had any reason to be concerned about losing any of their deposits. "I don't believe there was ever a danger of that," Mr. Richards said. "Many of the bank's operations have been successful."

He added that Butterfield was not alone in seeing the value of its investment portfolio decline. "Many have suffered from finding that their AAA-rated investments were rotten inside," Mr. Richards said. "That is something banks around the world have been grappling with."

Mr. Redford said yesterday's statements from Butterfield and Minister Cox were perhaps "the most stark illustrations to date" that the global crisis was impacting Bermuda.

"More than anything that has happened previously, the events surrounding Butterfield Bank will bring into sharp focus for Bermudians the fact that we in Bermuda are not immune from the world's economic woes," Mr. Redford said.

"Bermudians must fully accept this economic reality soberly but without panic, so that we can weather the storm with the minimum negative effect on employment and our economy.

"We do believe that some comfort can be drawn from the fact that the bank is not failing and that Government has moved swiftly and decisively to ensure that the bank's capitalisation is bolstered to a level that the Bermuda Monetary Authority believes is prudent to ensure the bank's continued healthy operations.

"There is a healthy sign here that Bermuda's regulatory controls are standing us in good stead and are perhaps more robust than in many other jurisdictions."