Bermuda's banks could face stiff competition from international banks setting up on the Island within the next few years according to Bank of Bermuda chief operating officer Phillip Butterfield.

Speaking at the annual general meeting of the Bermuda Human Resources Association at the Hamilton Fairmont Princess yesterday, Mr. Butterfield said Bermuda's success to date had been achieved in a protected environment and that to succeed in the face of global competition, workers needed to keep pace with the fast changing economy.

“Maintaining the status-quo is inadequate,” said Mr. Butterfield who said that change was inevitable.

He added: “Business as usual is not acceptable.”

Mr. Butterfield said Bermuda's government had already been in talks with foreign financial institutions who wished to establish a business presence in Bermuda.

He stressed “the question is not ‘if', but ‘when'.”

Mr. Butterfield worked for US-based bank Citigroup for almost 30 years before returning to Bermuda to work for the Bank of Bermuda several years ago.

Examining the impact on the local banking sector by using Citigroup setting up an operation in Bermuda as an example, Mr. Butterfield said local banks would have to compete against an organisation who could search tirelessly through 240,000 employees to find the best team to build business in Bermuda. He also said: “Their mission would be to become number one within the new market within the shortest possible time frame.”

Mr. Butterfield said to achieve their mission the bank would tap their much larger financial resources for a relentless delivery of superior products and customer service.

As far as corporate culture in a new Bermuda start-up bank, Mr. Butterfield said every day the employees would ask themselves how they were doing and what progress they had made towards achieving their mission. They would also not compete against each other and would work together to meet their goals and would not give up until they did. “This kind of player would be a great challenge for any of us to face here in Bermuda. Yet even if our rivals remain overseas, we must be sensitive to the pressures of global competition and respond.”

The Royal Gazette has written stories about the opening of Bermuda's banking sector to foreign corporations and Bermuda Monetary Authority (BMA) superintendent of banking, trusts and investment Munro Sutherland yesterday confirmed that Government has been in talks with foreign banks about setting up an operation on the Island.

Mr. Sutherland pointed to the BMA's latest annual report released in April which examined licensing of Bermuda's banks and said: “Following completion of a review of Government's policy approach to the banking sector during the year, the Minister of Finance granted exemptions from the Companies Act requirement for the existing banks and deposit companies to be 60 percent Bermudian owned. The Minister has also indicated that Government is satisfied that some modest expansion in the size of the banking sector, through the issue of new licences to a small number of highly reputable institutions, would be consistent with the economic and financial policy of the Government.”

The BMA report also said: “The Authority has received a number of expressions of interest in the possibility of obtaining a banking licence and has had preliminary discussions with several institutions. The Authority has also received two formal applications that remain under consideration.”

Mr. Sutherland said he could not say much more beyond this but said there had been exploratory talks with a number of institutions but it was a question of waiting and seeing but that Government had given the green light to some modest expansion.