banks will pay the highest bank fees in the world following increases announced in yesterday Budget.

The banks will have to pay the Government an extra $250,000 a year in licence fees -- up from $500,000 to $750,000 per year, according to the Budget read yesterday by Finance Minister the Hon. David Saul.

The fee will inevitably come off the bottom line, said Mr. Lines. He was unhappy that Dr. Saul used the bank's increased profits during the last fiscal year, and the lack of corporation or profit taxes as justification for the increase.

"It is a poor way to justify the tax,'' said Mr. Lines.

The Bank of Bermuda made a profit for fiscal 1993 of almost $36 million -- up 26 percent over the previous year -- a record profit for the bank.

After a two year hold on increases in licence fees for the banks, Dr. Saul saw fit to increase bank fees in this year's Budget.

"We fully expected that we would be nailed, but it is unfair because the bank is not making a profit in Bermuda, but through its international business,'' said Mr. Lines.

The fee for Bermuda Commercial Bank (BCB) will be raised to $100,000, as "the bank gets on its feet'', said Dr. Saul in a press conference yesterday.

Mr. Lines objected to the lenient treatment given to BCB. He advocates a level playing field for all banks in Bermuda. Deposit company fees, which were last raised in 1990, are to be increased to $5,000.

Mr. Michael Collier, president and chief operating officer at the Bank of Butterfield interpreted the increase in fees as Government's attempt to recoup revenue lost during the recession.

The Bank of Butterfield had earnings of $30.1 million in 1993 and recently announced half year profits of $16.4 million.

"Both the big banks are doing well,'' said Mr. Collier. "We knew that Telco had incurred an increase in licence fee in a recent Budget, so it was no surprise.'' To accommodate the increase, the Bank of Butterfield will continue to consolidate its financial performance, said Mr. Collier, and diffuse the extra cost across the entire operation.

The increase will not necessarily be passed to domestic bank customers, although Mr. Collier said the bank would review its own budget and charges this spring.

Mr. Michael Collier Mr. Donald Lines.