Bosses at the Bank of Bermuda yesterday said its buy-out by multinational banking giant HSBC Plc in February has already led to savings of more than $500 million.

At a Press conference, the bank's top managers - CEO Philip Butterfield, COO Andy Gent and CFO Nigel Crow - gave an update on what had been achieved by the bank since its $1.3 billion sale on February 16.

That included massive savings as a result of being bought up by HSBC, according to Mr. Crow.

"So far, we have been largely focused on taking advantage of the enlarged purchasing power of HSBC," he said, adding that $500 million in savings on one-off costs and $8 million on recurring costs had been shaved from the bank's operating costs."

The bank heads, unintentionally colour-coordinated yesterday in navy blue blazers and green Bermuda shorts, said in the first six months they had not only watched costs but also moved "aggressively" to grow their client base. Mr. Butterfield said one way of attracting more business was the bank's move to lower interest rates for home mortgages in April, making them "a highly competitive customer-friendly solution".

He said the bank's message to the community was: "We are here; we are in business and we want your business."

And don't expect the bank - which is the Island's largest financial institution, and a large employer of Bermudians - to lose its "Bermudian flavour" anytime soon.

"I never see a lessening of Bermudian flavour. We are committed to the Bank of Bermuda branding for the next five years and we have a significant proportion of Bermuda staff, and it will remain that way," he said, adding that he was part of the bank's "Bermudian flavour".

Training opportunities for Bermudians through HSBC's global network were cited by Mr. Butterfield as one way the bank would be able to promote Bermudians by "allowing us to, in a very concrete way, augment the professionalism of our staff".

But he allowed that the bank would continue to seek work permits for positions where "expertise and knowledge were not resident in Bermudians".

In the seven months since the sale was closed, the bank said it had lost 120 staff through 'natural attrition', 33 staff were made redundant, but also have hired on 113 new staff.

Of those who have come and gone, 21 of the 33 redundancies put Bermudians out of jobs while of the 113 new hires, 97 Bermudians or spouses of Bermudians joined the bank since the sale.

But an unspecified number of further redundancies are in the pipeline this year, Mr. Butterfield said.

The news will not surprise staff who had been warned of significant job cuts at the time HSBC's bid for the bank was announced last October.

The bank had been saying since last October that "meaningful" redundancies would follow the sale.

At the time, bank management said the number of jobs to be cut in the next three years might go as high as 250.

But the job cuts, coupled with a drive to keep 'key' personnel, are also set to earn senior bank executives could a multi-million dollar bonus payment at the end of the year.

The bank's top management are collectively due - under the terms of an executive incentive plan inked with HSBC as part of the sales agreement - $11 million in cash and investment options (broken down as $6.59 million in cash and $4.7 million in HSBC restricted shares) - if they fire 150 bank staff while retaining 70 percent of those employees defined as 'key'.

The job cuts can also be made in the bank's global offices, which are currently being integrated into the HSBC network.

Mr. Butterfield said that the bank had finished compiling a list of 'key' personnel and that those staff members had been made aware of what was expected of them.

"As part of any transition process, management on both sides of the table have the responsibility to step back and take a look at the key resources that are absolutely necessary in order to sustain the success of the organisation. We, on our side, spent a considerable amount of time going business by business, and support unit by support unit, and constructing a list of persons that we felt it was absolutely essential remain with us for the foreseeable future.

"That lists exists and it is the responsibility of our management team to ensure that those persons understand that they have been so designated and to take accountability for nurturing the careers of those individuals. So, on a one-to-one basis, there have been conversations so the persons that are on that list know they are and know what expectations we have of them."

He added that in choosing 'key' staff the bank had looked at departments and the skill sets held by employees, with a focus on those who interact with clients.

"If there was any bias, it was to look at the people in client contact roles. Our business is about relationships, so what we wanted to do was make sure that people who today have a responsibility for critical customer relationships, that we have continuity in that regard. So there is a bias in the pool of persons so designated in that a significant portion are on the client relationship side of our business.

"We also wanted to be certain that within that pool of persons were people who over time could move on to larger levels of responsibility within the organisation. We were mindful of people that had long-term potential to become members of the senior management team."

Mr. Butterfield declined to put a number on how many had been designated as 'key' employees. "I don't think it would be useful for me to specify a number except to say it is sufficient from where I stand. We have properly identified the right group of people."

He said "Bermudians were prominently represented in that group."

When asked for more information on what percentage of Bermudians would have been chosen, he said: "It is probably representative of the level that Bermudians enjoy in the overall staff numbers in the organisation."

Currently, the bank said its head count was 1,036 employees which is down slightly on the 1,100 that were employed when the sale went through seven months ago.

In total, the bank's workforce was said to be comprised significantly of Bermudians with only 18 percent of staff holding work permits.

In the time since the sale, five HSBC staff have joined the organisation. The first two were Mr. Gent and Mr. Crow and more recently Gonzalo Jalles was named to head the bank's new asset management division. Another position was said to have gone to an HSBC contract worker hired to oversee the bank's migration to HSBC's technology platform - or HSBC Universal Banking System (HUB).

Both Mr. Gent and Mr. Crow, who have made careers with HSBC since they joined the banking giant in 1977, joined the bank at the time of the sale, respectively replacing Mr. Butterfield as COO when he was named to replace Henry Smith as CEO and outgoing chief financial officer, Edward Gomez.

Mr. Gomez has since filed legal action against the bank although neither party would speak to the dispute when it was filed with the Supreme Court. And Mr. Smith has been named an executive director, as well as travelling globally to help with the integration of the bank's offices into the HSBC network.

That "integration" should be completed by the end of the year or at the latest in the first quarter of 2005, said Mr. Gent yesterday.

Before the sale the bank had offices around the world including in Bahrain, the Cayman Islands, Dublin, a Swiss joint venture, Guernsey, Hong Kong, Isle of Man, Jersey, London, Luxembourg, New York and Singapore.

Meanwhile, Mr. Gent said it would take about two years for the bank's migration on to the HUB network, which is used in 45 of the 79 countries where they are doing business.

Mr. Butterfield said it would replace seven Bank of Bermuda systems and enable significant improvements in efficiency and reduce costs.

It will also reportedly speed up banking services, including teller services, and broaden access to products and services.

Mr. Butterfield added: "It allows us to better serve our clients as we can effect the movement of money and conduct transactions across the HSBC network globally in a very efficient manner.

"Any of our clients - whether corporate or individual - when that system is implemented will find that our capability as a financial services will be superior to any other in the jurisdiction (Bermuda) as we will be directly connected to a global network."

And for travelling customers, with HUB in place, will be able to access their Bank of Bermuda accounts from any HSBC office or ATM worldwide.

"A Bermudian travelling - if this were two years from now - would be able to go into an HSBC facility and instantly be recognised as a client," Mr. Butterfield said.

Staff morale:

Mr. Butterfield conceded that the bank's sale to HSBC, after 114 years as a stand-alone institution, may have unsettled staff, but he said that he was not aware of any serious discontent from employees.

"I would say to you that to the extent that there is discontent it has been minimal.

"I know from experience that any change brings about the potential for negative reaction but I amvery proud of the way that the majority of my colleagues have embraced the change we have taken."

He said the bank had also moved shortly after the sale to make sure that employees saw the bank as a place of opportunity - with much greater training and development opportunities within HSBC's global network - and that benefitted its staff.

"We took some steps very early on in our new beginnings to increase the levels of staff benefits that any one of our colleagueswould receive; we changed the rates on personal mortgages, we lowered the fees for personal loans, we've changed our leave policy for maternity,paternity, sports leave."

He added: "We've done any number of things to demonstrate to our colleagues that we are listening to their concerns and that we can and have been responsive to those concerns. I do recognise that you cannot please all the people, all the time. But I would say to you that I believe, to date, we have done a quality job in making sure the interests of the organisation as a whole have been responded to."

As for where staff can turn if they do have concerns, Mr. Butterfield said: "I give out my phone number and e-mail address to everyone. I encourage people to access me, to talk to me directly, and I've been operating under a process where every few weeks, I send out an e-mail from my desk that provides an update to everybody on what are the hot issues we've been dealing with, the successes we've experienced as an organiation, newpolicies, practices or benefits that we are providing to staff or customers.

"We are trying to use that mechanism as a means of regularly informing all ofour colleagues in the jurisdiction (Bermuda) of what is going on," he said.