Bank of Bermuda has announced it is scaling down its large offices in Cayman and slashing its staff there by 84 percent.

The announcement, made yesterday evening, was made shortly after staff in the subsidiary's offices were given the bad news that just eight out of the 50 staff would be left in Cayman and the bulk of the business done there transferred to Bermuda.

A spokeswoman for the company said that the move had nothing to do with the Cash 4 Titles scandal, which involved the Bank of Bermuda Cayman offices and the bank reached an out-of-court settlement which saw Bank of Bermuda pay out $67.5 million last year.

The scandal engulfed Bank of Bermuda which saw almost half of the $300 million lost by investors go through its Cayman Island offices.

In a statement yesterday Bank of Bermuda said it was "restructuring" its Americas activities.

It added it was servicing the majority of its Cayman clients from its Bermuda headquarters.

It said that this process followed "a close examination of the way in which the Bank's Cayman clients are currently serviced with a view to providing more streamlined support and ensuring all clients have access to the full depth of the bank's expertise".

The bank said it has three global businesses - cash management, fund administration and fiduciary services - that have a presence in the Cayman Islands, and are currently serviced by 50 employees.

These services will now be transferred to Bermuda, but it added that although Bank of Bermuda (Cayman) Limited will retain the necessary licence and presence to ensure that the bank's businesses continue to meet their respective client's local requirements.

"We constantly examine whether we can improve the quality and the efficiency of our client servicing. This change enables us to improve both," said Henry Smith, Chief Executive Officer. "We see Cayman as an important place to do business, but need to take a broader, regional view of how best we can structure ourselves."

He said that this kind of restructure had proved highly successful for Bank of Bermuda in the Asia Pacific region and enabled the bank to consolidate support functions, and avoid duplication of activities.

He said that all three of the bank's global businesses had been reviewing their services in line with their business strategies and "see benefits in this restructure".

He said that the bank expected it to make it a stronger and more focused organisation to do business.

Mr Smith added: "I would not want to make this announcement without paying tribute to our employees in the Cayman office, several of whom have been with us for a number of years.

"As we are only in the early stages of discussing implications of this restructure with our staff, I have no definite numbers as to how many employees will stay with us and how many will be provided with redundancy packages.

"Although we expect to retain approximately eight staff in the Cayman office, and we hope to redeploy some employees in other locations, we recognise that not everyone will be able or willing to move with us and will seek other opportunities elsewhere. I would like to thank them for their dedication and commitment and wish them well in their future endeavours."

Bank of Bermuda had a poor year in 2001, with profits dropping from $115.8 million in 2000 to $60.1 million in 2001. Earnings per share fell from $3.77 in 2000 to just $1.91 in 2001.

The bank was not only hit by pay outs for Cash 4 Titles, but also lost million on its investment with First E-com.com, and recorded a loss of $15.8 million in the last quarter of last year, reported as a "decline in investment valuations".