Multinational bank HSBC said the Bank of Bermuda's very successful fund administration arm - Global Fund Services - and private banking business were compelling motivators in its bid to purchase the Island's largest financial institution.

HSBC group general manager Iain Stewart, at a press conference yesterday morning announcing that a takeover bid by HSBC had been accepted by Bank of Bermuda, said the Island was also a selling point with it being a "preeminent offshore banking centre and blue-chip jurisdiction".

Indeed, HSBC said it could move some operations to the Island including its trust business. Although the deal, which is still subject to shareholder and regulatory approval, could see the Bank of Bermuda's global branch offices merged into HSBC operations, HSBC said locally, Bank of Bermuda would be branded with both the existing logo and HSBC's hexagon logo.

HSBC's purchase of the Bank of Bermuda is the latest buy this year for the acquisitive banking group which has reportedly spent some $16 billion in 2003 alone on acquisitions. Reuters reported that HSBC had earlier this month bought out most of the Brazilian assets of British rival Lloyds TSB for $815 million, and cited HSBC as growing its presence in the Americas.

Speaking of its deal to take over the Bank of Bermuda, Mr. Stewart cited synergies between the two organisations and called it an "excellent match".

"Like the bank, HSBC's reputation is as an ethical, prudent and long-term oriented international institution, with a strong track record of profitability," he said, adding that the Bank of Bermuda and HSBC had a long-standing relationship with each other including links to Midland Bank, which was a shareholder of the Bank of Bermuda in the 1970s, and was later bought by HSBC.

Mr. Stewart said HSBC had been particularly impressed with the Bank of Bermuda's fund administration business - Global Fund Services - and its private banking business.

Mr. Stewart praised the Bank of Bermuda's fund administration arm for its focus on alternative investment vehicles, and said GFS, which has $113 billion in assets under administration, had outperformed HSBC's fund administration business. He also announced that the global head of GFS, Paul Smith, would be given charge for the combined fund administration business of both banks. In conclusion, Mr. Stewart said: "HSBC started in 1865 as The Hong Kong and Shanghai Banking Corporation, on an island, like yourselves, and has grown steadily to become the world's second largest banking institution, with a market capitalisation of over $US 120 billion."