Any interest from foreign banks to set up in Bermuda may have waned due to difficult economic conditions, according to the Bermuda Monetary Authority.

BMA superintendent of banking, trusts and investment Munro Sutherland said that as the licensing authority for the Island's financial services sector it had seen interest from a number of parties, including foreign institutions, but that two formal applications for banking licences made in 2001 were no longer being considered.

Those applications have now reportedly been withdrawn, with the BMA's 2002 annual report reporting that no new banking applications were received last year and that the applications that had been made were no longer on the table.

Multinational bank HSBC and the Bank of Bermuda were said to be in possible takeover talks according to a claim made by BIU president and PLP backbencher Derrick Burgess this week. But Mr. Sutherland would not be drawn into whether or not HSBC had been one of the applicants under consideration. The applications were said to have been "withdrawn - one during 2002, and the other early in 2003 - reflecting, in part at least, the current difficult economic conditions internationally for the establishment of new banking ventures," according to the BMA's annual report.

It could be just a matter of time, however, before the Island opens up to foreign banks with the 2001 BMA annual report reporting that Finance Minister Eugene Cox had given the prospect of modest expansion in the size of the banking sector, whether foreign or local a thumbs up as long as the applicants were "institutions of really high quality". The report added that 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 possibility of the banking sector opening to more players prompted Bank of Bermuda chief operating officer Phil Butterfield to tell the business community last year that competition from foreign banks was inevitable.

Mr. Butterfield said in a speech at a local business lunch that Bermuda's government had already been in talks with foreign financial institutions who wished to establish a business presence in Bermuda and stressed "the question is not 'if', but 'when'."