The board of Bermuda Commercial Bank (BCB) found a buyer for the bank and agreed terms — only for the controlling shareholder, First Curacao International Bank (FCIB), to pull the plug on the deal.

An agreement was reached with an interested party and a draft purchase and sales agreement was approved by the board and endorsed by its financial advisor, Keefe, Bruyette and Woods in New York, at the end of last year, as disclosed to shareholders in a letter by chairman Dr. Clarence Terceira and president John Sainsbury.

But, to the consternation of the board, FCIB withheld its support of the deal. FCIB was acting under instruction from the Central Bank of the Netherlands Antilles, which took control of the Curacao bank following an investigation by the Dutch authorities into alleged money laundering and other illegalities in September 2006.

After two extensions of the deadline, requested by the Central Bank/FCIB, a letter was received from the Central Bank advising that it could not support the agreement reached and suggested that "based on the present information at its disposal", more favourable terms and conditions were available.

The letter explained that the board elected to look for a strategic partner or an outright purchaser for the bank more than 18 months ago, but soon after the decision was made, FCIB came under investigation and was taken charge of by the Central Bank, making a possible sale considerably more difficult with potential buyers were faced both the business and reputational risk attached to it. Former BCB chairman John Deuss also resigned as chairman in October 2006, along with two directors who had connections with FCIB. These fears, however, were laid to rest as the result of the completion of a forensic audit, and a full financial audit to March 31, 2007, and nine interested parties submitted offers in May last year, with negotiations starting with the best of them.

It was not possible to conclude a sales agreement with the selected party, but an agreement was reached with another of the parties in November 2007 and the deal looked set to go ahead before it was scuppered by FCIB.

Since then, the Central Bank was invited, on behalf of FCIB, to solicit tender offers for the common shares, warrants and options of the BCB held by FCIB.

The letter reads: "If the Central Bank is successful in its efforts, and the purchaser of its holdings is then approved by the Bermuda Monetary Authority and the Ministry of Finance, the BCB board would be a in a position to consider any approach from the purchaser concerning the balance of ownership of BCB and make a recommendation to the 1,100 minority shareholders.

"If the Central Bank is not successful, the BCB Board has reserved its rights and legal and equitable remedies with respect to BCB and its minority shareholders.

"The BCB Board has emphasised to the Central Bank the importance of concluding a transaction as quickly as possible."

Butterfield Bank had expressed an interest in buying the BCB in October 2006, but later withdrew it.

The BCB said its results of the first quarter of the new financial year were "very encouraging" and anticipated that the six-month results to March 31, 2008, will "compare favourably with those of the comparative six months of last year".