In the last two years Bank of Bermuda has written off $25.6 million in investments in two start-ups, First Ecom and Measurisk, according to the bank's annual report.

The bank reported the multi-million dollar losses in a section called "other income/losses" on pages 25 and 26 of the report and showed that Bank of Bermuda has written off $15.6 million from just the two bad investments during 2001.

During 2001, the bank saw its profits nearly half from the year before, dropping from $115.8 million in 2000 to $60.1 million in 2001.

An investment in a start-up Measurisk, which offers risk management analytical information to financial companies, has cost the bank $11.5 million

And the bank has written off a further $4.1 million in the failed venture First Ecom, which has since changed its name and moved completely out of any e-commerce and into gas production. The bank wrote of $10 million in 2000 for its investment in the start-up First Ecom.

In the section headed Measurisk, the bank revealed it had invested $4.2 million during 2001 in the company, bringing the total investment in the company to $11.5 million.

They said that they then began to "account for the investment using the equity method."

They said that their share of Measurisk losses was $4.2 million in 2001, but they also expended a further $1.3 million "relating to amortisation of goodwill acquired upon the investment in Measurisk".

The report added: "At December 31, 2001, we determined that the investment was other than temporarily impaired due to Measurisk's inability to meet certain targets. A provision against the remaining carrying value of the investment of $6.0 million was made. We are now carrying the investment as nil."

Measurisk was set up in 1999 as a joint venture with XL Capital and Morgan Stanley Dean Witter & Co and Micro Modeling Associates to create an Internet-based software system for measuring risky investments.

Originally called Measurisk.com, it was set up to give pension plans, investment management firms, insurance companies, hedge funds and mutual funds a way to measure various risks in their portfolios.

The bank said that in 2001 the bank sold its investment in First Ecom and lodged a net loss of $4.1 million. A year earlier the bank wrote off $10 million in the venture.

First Ecom started life as a Bermuda start-up e-commerce company called First Ecom.com, and cost the Island dear. Its investors bailed out and the company changed into a gas exploration company.

First Ecom Inc. saw its stock fall from $34 to under $1 in less than 12 months and then merged with a US gas and oil exploration company in a bid to diversify out of the electronic card processing business.

Net loss for the second quarter of 2001 after amortisation, depreciation and non-cash compensation associated with stock options was $1.6 million as compared to the first quarter of 2000 net loss of $4.3 million - a sizeable improvement over the previous year.

Lines Overseas Management also heavily invested in the start-up which first dropped the "dot-com" from its name and then signed a memorandum of understanding with Denver-based Gasgo Energy Ltd., a company which explores petroleum and natural gas properties.

First Ecom, which was launched on the Nasdaq at the end of 1999, posted revenue from continuing operations for the quarter of $24,152 as compared with revenue for the same quarter in 2000 of $5,730.

Bank of Bermuda owned more than ten percent of the company (10.3 percent), and LOM owned more than 13 percent. Both are believed to have bought into the company for $7 a share.

In the annual report for 2001, Bank of Bermuda said that it had also sold its remaining 50 percent stake in its joint venture with First Ecom, First Ecommerce Data Services (FEDS).

FEDS was set up as a multi-currency credit card processing solution for online merchants The venture was sold to First Ecom for $2 million. A year before the bank had sold its initial 50 percent to First Ecom for $2.8 million.

The bank said: "This sale followed our strategic decision to stop providing payment processing services to online merchants."

In addition the bank reported that the bank's share of the loss made by FEDS totalled $0.5 million - $0.3 million for 2001, and $0.2 million for 2000.

The bank also reports unspecified "other income/(loss)" of $1.9 million, and compares this to another unspecified gain of $7.9 million for this category the year before.