The Bank of Bermuda's announcement yesterday that it has agreed to be bought by HSBC Plc for $1.3 billion will have caused a variety of emotions in the community.

The buyout brings an end to the independence of Bermuda's largest banks and a symbol of the success of Bermuda as an offshore financial centre.

While the bank is enormous in Bermuda economic terms, it remains a minnow in global terms and has had difficulty deciding how it can compete with giants like HSBC.

The lacklustre performance of its share price since it gained a listing on the NASDAQ market confirms that. In spite of the fact that it was undervalued compared to many of its competitors, its lack of size meant that its price has remained essentially flat.

Having been listed in the middle of a bear market, it was inevitably put into play as a take-over target and it has now apparently decided to exchange its independence for the better growth opportunities that becoming part of HSBC affords.

And there are much worse banks than HSBC, which has a reputation for quality and prudence.

Still, this deal cannot be seen purely in business terms. The Bank of Bermuda is a symbol of much more than that because of its long and successful history.

It is likely that Bermuda would not have such a vibrant international business sector without the efforts of a series of senior bank executives from the late Sir Henry Tucker on.

And the bank has had enormous influence on the direction of Bermuda's local economy as well. While some would argue it has had too much, the fact remains that Bermuda would be a different place without "The Bank".

For now, the bank will retain some independence with its own board and management under the flag of HSBC.

That gives some comfort and clearly was a factor in the support that the deal has received from the Ministry of Finance. But it's anyone's guess how long its autonomy will last. If the bank under its own management cannot return solid gains year after year, it is likely that HSBC will decide to replace it with others who can.

HSBC prides itself, at least in its advertising, on being "the world's local bank", but how far that will extend may ultimately depend on the bank's bottom line.

On the other hand, the bank can now avail itself of a range of services and expertise that it could not provide on its own and that may be an advantage for Bermuda.

So far, the reaction of many financial leaders to the announcement has been positive and they have emphasised how HSBC's interest in Bermuda underlines its blue chip reputation.

That may be so. But it is hard not to disagree with former Bank of Bermuda chief executive officer Donald Lines and Capital G chairman James Gibbons when they say that it is a sad day when a local bank ends up in foreign hands.

With the Government having given surprisingly enthusiastic support to the deal, it will now be up to shareholders to decide the bank's fate.

Some will consider the broader issues of Bermuda's social fabric in their decision while others will make their decision on a purely economic basis.

Even that decision will not be easy. The bank's own management has regarded the bank's share price to be undervalued compared to its peers and on that basis it is not clear why they are happy with the offer of $45 per share when the share price was briefly at $50 around the time it floated.

But they may feel it is as good a price as they are going to get in the current market.

It's worth remembering that HSBC is only paying $40 per share while the other $5 will come out of the bank's own funds as a special dividend.

It seems like a good deal for HSBC. Whether it will be a good deal for Bermuda remains to be seen.