Bank of NT Butterfield & Son faces a year of challenges and opportunities in 2004, according to its president and chief executive officer Alan Thompson.

Speaking to a small group of shareholders at Bermuda's oldest bank's annual general meeting yesterday, Mr. Thompson said that it had been a good year for the bank, with high shareholder value and excellent results ? but said there was uncertainty on the horizon.

"Clearly there are challenges in the coming year," he told The Royal Gazette after the AGM and explained that this was due to three factors ? the uncertain state of the world economy, the buying of Bank of Bermuda by HSBC and their recent chain of acquisitions.

"In the economic environment, it is not clear what it is going to do on a world wide scale. Plus there are the changes in the local environment, which is a major change for us and an unknown. Thirdly we will be focusing on integrating our many acquisitions into our business model for 2004."

Strengths included the financial results of the company, its focus on customer service, its systems and most importantly its staff.

"I am confident that we have the organisational strengths and capabilities to continue to generate value," he said.

Chairman of the board, James King, told shareholders: "The true test of any business plan is its ability to produce strong financial results. Bank of Butterfield has indeed proven its strategy is sound and effective, as evidenced by a steady increase in net income and return on equity of over 20 percent for the past four years."-

Mr. Thompson presented the highlights the financial results of the company to the 32 shareholders gathered in the Bermuda Underwater Exploration Institute, with net income at $76.5 million and assets of $7.7 billion in 2003.

And he detailed the bank's new acquisitions - two Bahamas-based financial companies and a community bank in Barbados as well as the headlining purchase of the bank of the stars, Leopold Joseph, in London.

"While acquisitions attract public attention, maintaining and building the strength of the bank's core businesses remains our top priority," he said.

The deal to acquire Leopold Joseph for ?51.1 million ($94.5 million) was approved by the London bank's shareholders last week.

Mr. Thompson was last night flying out to London to sign and seal the deal in a three-day whirl-wind visit.

But when asked yesterday if there would be any redundancies, he refused to be drawn, but implied that there would be job cuts. When pushed and asked, "So there won't be any redundancies?"

Mr. Thompson said: "I didn't say that. But we won't know until we have done a strategic review."

Mr. Thompson said that there "may be some" but there was not much duplication between Bermuda and London.

"Our staff is obviously pleased at the deal," he said. "Leopold Joseph staff are concerned, but our values are the same as theirs with focus primarily on customers, that is the real issue."

Mr. Thompson said that the deal will officially be signed to take over the bank, which boasts Cat Stevens and the Rolling Stones as customers, on Friday, April 2.

"We delayed the date slightly to make sure it was not April Fools day. We do not need the extra jokes," he said.