Bank of Bermuda CEO Henry Smith wants nothing more than to get shareholder materials detailing the bank's proposed sale to multinational banking giant HSBC mailed off to investors.

Mr. Smith said the bank's management have had to be tight-lipped on certain subjects - and have been unable to refute criticisms thrown at the bank since the deal was announced last month - until all information on the sale was released to shareholders.

Materials - including the fairness opinion given by Merrill Lynch on the sale of the bank for the price of $1.3 billion - are set to be sent out in the coming weeks. After the information has gone out, Mr. Smith said a round of shareholder discussions and meetings would take place.

“We are in a bit of a limbo state, in that we have to get the proxy mailing out. Until that happens we can only make fairly general comments about the transaction. This has been frustrating as people have (through the newspapers) made all kinds of judgements and accusations.

“Once they (the materials) have gone out, we plan to go pretty heavily into discussions with shareholders, including town hall and individual meetings. In the meantime we are trying to keep the bank running as normal - we are very much engaged in the day to day, including talking to staff, keeping them calm and make sure they understand what this (sale) means for them.”

When asked if he had been surprised by some of the criticism - including some shareholders citing the pay out price of $45 per share as being too low - that followed the announcement that the bank could be sold to HSBC, Mr. Smith said: “I expected a lot of emotional concern and I thought we would actually have more of ‘this is a sad day for Bermuda' than we have got.

“People like (former bank CEO) Donald Lines and (former Premier) John Swan, people who understand these things, were in the paper saying the same thing I would say, that ‘it is a sad thing for Bermuda that we cannot somehow continue as Bank of Bermuda' but then immediately say however that this makes sense. That there has not been more of this type of emotion has surprised me a little.”

Mr. Smith continued: “I was very surprised, frankly, that we have had as much fuss about the price. As we have said, we do think it is a fair price, and I will be very happy when everyone (shareholders) have the materials and they can look at Merrill's fairness opinion. Once they have that, we can discuss things face to face with shareholders.”

He said that both the bank's board and senior executives were completely behind the proposed deal. “From the moment HSBC talked to us, we knew this was going to be sensitive politically. We knew it was going to be a lot of work, taking a long time.

He added: “I realised there would be times that I would pretty frustrated in trying to make this happen. My first thought, on a personal basis, was I really would rather not. That is a reflection of the emotion that most Bermudians have about this transaction. Wouldn't it be nice if we could keep it somehow? But it did not take me long to see that the opportunities are potentially so powerful that it would be well-worth the public and political sensitivities, even embarrassment.

“I really did not want to go down in history as the guy who sold the Bank of Bermuda to a foreign bank. But now I am glad it is me. It is the right thing to do for everybody. I cannot predict the future but I do believe that history will look on this favourably.”

Mr. Smith said his view was that, if “done right”, opening up the financial services sector - as the HSBC deal will begin to do - could create a second industry to rival the Island's insurance sector.

“There could not be a better way to start (opening the sector). The world's second largest bank is coming to Bermuda, and in doing so, the transaction will preserve most of the jobs that we have, preserve the Bermudianess of this part of the bank and deliver products and services that we never could.

“It is extraordinary, it is a coup on behalf of this Government, and I think they know it. What will they do next? That gets a little tricky as you want the best players, you do not want just anybody coming into Bermuda. But they (Government) should take credit for doing the right thing.”

Although Mr. Smith had said at the time the bank listed on the Nasdaq in April, 2002, that it was unlikely to stray from its more than 100-year course as an independent institution, he said last week: “First of all, what I was trying to say there was there would not be a hostile takeover. We were protected from a hostile takeover with our own poison pill. Government could also clearly step in and nix something like that. I was not saying, and I could not ever say as a board member, that if the right offer came along we would just burn it. We would not be doing our duty to shareholders if we did. But more importantly, the environment today is very different from that on listing.

“We certainly had hopes that with listing we would be able to springboard into growth and remain independent. All of us in management were thinking along those lines. But we ran into in terms of the markets and the environment, what we now recognise is it makes more sense to combine with HSBC. And when I talk about being driven by change, that includes the fact that Government said it was going to open up (the Island's financial services sector). That was a big factor.”

•Henry Smith will address the Hamilton Rotary club today on the HSBC acquisition of the Bank of Bermuda.

Mr. Smith and bank COO Philip Butterfield will also take part in a special meeting this week for those interested in further information on the proposed HSBC deal, from the Warwick branches of the PLP. The meeting is to take place at the Warwick Workman's Club at 8 p.m. on Thursday.