Governor Sir John Vereker last night backed the Island's Independence debate.

In an address to HSBC banking titans and Government leaders gathered for a power dinner last night, Sir John told board members they had made a good choice in coming to Bermuda - HSBC paid $1.3 billion for the Bank of Bermuda nearly a year ago - but said he recognised that business likes certainty.

Sir John cautioned that Bermuda was at a crossroads in terms of its relationship with Britain, with a debate on the issue of Independence being opened by Government after a change in administration in July, 2003.

“I am of course acutely aware that what business dislikes most is uncertainty, such as over Bermuda's future constitutional relationship with the United Kingdom,” he said.

“Let me say therefore, unequivocally, that I think the Government of Bermuda is right to bring that issue into the open and to a conclusion,” he told the gathering which included Premier Alex Scott and HSBC chairman Sir John Bond.

Sir John aired his views while praising HSBC for its decision to come to Bermuda.

All 22 HSBC board members were expected on the Island this week for board meetings.

The sale to HSBC was an emotional one for the Island as it marked the first time a local financial institution had been sold to a foreign bank. In its 114-year history the bank had become the Island's biggest bank and largest private sector employer.

Sir John last night told the HSBC contingent that the UK had “long supported the principle of self-determination for its Overseas Territories”.

“Each of the remaining Territories has the right to remain British if that is what they want,” he said.

“In return we expect, and are committed to ensuring, high standards of probity in governance, the maintenance of law and order, sustainable economic development, and adherence to relevant international agreements, including those which relate to offshore financial services. But we will give every help and encouragement to those Territories who wish to proceed to Independence, where that it is a realistic option.”

Whatever road Bermuda takes, Sir John praised HSBC for taking a chance on the Island.

“I have made no secret of being among those who welcomed HSBC's decision to develop an active presence in Bermuda. I judged that Bermuda could only benefit from HSBC's strong reputation as a business, from its ability to bring global technology and standards to our island, and from its determination to be good corporate citizens in each of its locations. I was delighted that you, Honourable Premier, and your colleagues, took the same view,” he said.

“I hope that HSBC too believes it made the right choice in coming to Bermuda. In a widely noted speech on the first of December to the Bermuda Employers' Council, your CEO here (Philip Butterfield), himself a distinguished Bermudian, aired some concern about Bermuda's continuing competitiveness as a jurisdiction, and warned of the danger of complacency. He was right to do so. I have myself repeatedly warned that globalisation means that business and capital can move just as quickly and easily away from Bermuda as it has moved towards it.”

But the Governor added that Bermuda could hold its head high with a hard-earned reputation as a leading business jurisdiction.

“We in Bermuda do not control some aspects of our competitiveness, such as the tax regime in the United States, our currency, or the area of our available land. There are no short cuts to the solutions to some of the others, including our education and labour market issues. But there is a good story to tell in those areas that are within our control in the shorter term. Let me just mention two of them.

“First, we are maintaining our reputation as squeaky-clean place to do business. We were never included on the OECD hit list of harmful tax havens. The Financial Action Task Force on money laundering gave us a clean bill of health. The current IMF review of regulatory standards is drawing, albeit slowly, to a satisfactory conclusion. There are no remaining obstacles, of which I am aware, to designated investment exchange status for the Bermuda Stock Exchange. Throughout our international business sector, practitioners are driven by the need to protect Bermuda from reputation risk.

“And second, we have an independent and increasingly strong judiciary. With the appointment of two Lord Justices from the United Kingdom, our Court of Appeal commands confidence across the board. The five new Supreme Court judges I have appointed since 2003 are already making a big impact on the criminal and civil justice system. Together with sharply more proactive policing, they are helping to make Bermuda safer. Though problems associated with drugs continue to have both criminal and social repercussions, total recorded crimes in Bermuda have in fact fallen by over ten percent in each of the last two years.”

Sir John concluded: “Whatever the future of Bermuda, HSBC and companies of similar standing will always be welcome, and I hope that your board will make a regular practice of meeting here. Mark Twain, also a regular visitor, compared Bermuda to Paradise. I hope you and your colleagues will never feel strangers here.”