Mr. Wayne Jackson is an officer at the Bank of Bermuda, not L.P. Gutteridge as reported in yesterday's business section.

The dramatically changing financial scene in Bermuda -- including the recent relaxation of exchange controls -- has prompted the formation of a formidable new independent financial institution in Bermuda.

Bermuda Mortgage & Finance Ltd., a wholly-owned subsidiary of the Bank of Bermuda; The Bank of Bermuda's real estate division; L.P. Gutteridge Mortgage & Finance Ltd; and L.P. Gutteridge Ltd.'s real estate division will merge on March 31, 1994 to form Bermuda Home Ltd.

The new company will provide long-term financing for mortgages, consumer loans, real estate sales, and estate management.

Mr. Donald Lines, president and chief executive officer of the Bank of Bermuda, said negotiations between the two companies began on January 18, 1994.

"A group were discussing the problems associated with the change in exchange controls -- not so much the freeing of interest rates -- but more the long term capital requirements for Bermuda financing.

"This company will be a major entity in the development of the capital markets in Bermuda in the local sense. It is intended it will not just be a mortgage and consumer loans lending organisation, but it will provide a wider range of financial services in time.'' It will be directed at longer term capital requirements, as opposed to a short term deposit base, he said.

Mr. David Gutteridge, president of L.P. Gutteridge Ltd., which is the largest independent mortgage company, said: "The approach was made by the Bank of Bermuda, and considered in the light of the changing business environment.

"The exchange control regulations were being abolished, and the climate in which we did business was changing.

"The protective environment, in which we had operated for 40 years, was coming to an end. As a company, we were prepared to accept that challenge and move forward.

"But, when this opportunity presented itself, we had to look at it carefully.

We concluded it would be of benefit to our clients, staff and shareholders to form this larger entity as it would provide much more security for everyone concerned.'' He said the decision was unrelated to the retirement of Mr. J.J. (Jack) Outerbridge at the end of December last year.

Mr. Lines said: "We had had open discussions about the changing environment before. Mr. Gutteridge, like the bank, recognises that with the changes, there will have to be a move in different directions.

"The creation of a separate, independent, totally focussed on Bermuda financing requirements, company has compelling advantages.'' It is proposed that Bermuda Home be 25 percent owned by the L.P. Gutteridge Limited, and 25 percent owned by the Bank of Bermuda.

The remaining 50 percent will initially be owned by the Bank of Bermuda, but will be distributed to the bank's shareholders by way of a stock dividend. The distribution will take place on or by June 1.

The combined group will have share capital of $25 million initially, but this is expected to be raised to $40 million by mid-summer.

The extra $15 million will be raised by a rights issue, which will be underwritten by the Bank of Bermuda.

As a result of the Bank of Bermuda shareholder's receiving stock in Bermuda Home, there will be over 6,000 shareholders, said Mr. Lines.

One Bermuda Home share will be received for every ten shares held in the bank.

The combined group's mortgage portfolio is said to be bigger than any other mortgage company in Bermuda, and will comprise 50 percent of the existing mortgages.

The greater monopolistic hold on the market by the new company is "not at issue'', said Mr.

Lines.

"What most residents are looking for is service,'' he said. "As a result of the new company, there will be three financial institutions whereas before there were only two big ones, and some really small ones in the mortgage business. This is a much stronger full service institution, and the public are better served.'' The new company is expected to have an income level, projected to be about $4.5 million a year, that will pay dividends of 33 percent to shareholders, equating to a 40 cents per share per year dividend.

Mr. Lines predicted the bank's assets will rise closer to the $500 million mark, by the time the merger is completed -- expected to be June 1 -- and $100 million of the $470 million in assets are said to be deposits at the bank. Mr.

Lines said Bermuda Home would be solely focused on the local market: "An area where we have already had one bank leave the scene''.

The new financial institution will also provide an alternative workplace from the banks for "upwardly mobile'' young people in Bermuda.

"There will be a change in the structure of the local deposit taking companies in Bermuda,'' said Mr. Lines. "They will have to become more mobile, more innovative, and have a variety of products to deliver to their customers.

"The major shift in the deposit companies businesses in Bermuda will be that they have to attract, not short term deposits to finance long term loans because that did not matter when there was an encapsulated Bermuda dollar, but long term capital.

"The ability to raise long term capital will be critical to Bermuda's local financing needs.

"This company will be in that end of the market as opposed to the bank, which will be in the short end of the market, which is where the bank belongs.

The bank will continue to offer retail banking services, saving and loans and commercial loans.

"The longer term capital requirements will be more easily obtained through this new vehicle,'' he said.

The next nine months will be a time of consolidation of the operations, with little visible change in the first three months. No redundancies are planned.

"The real estate side may see some degree of redundancy, but this will be absorbed as the bank will provide continuous employment for those who may not be necessary for the continuing operation of this combined group,'' said Mr.

Lines.

Forty LPG staff are involved in the merger. L.P. Gutteridge Ltd.'s travel and insurance operations will continue under the same banner, as will the company's American Express service.

The LP Gutteridge building will be rented to Bermuda Home, which will have the option to buy the building at any time.

Bermuda Home fact file These are some of the financial highlights of Bermuda Home, which is being created through the merger of the deposit companies and real estate divisions of the Bank of Bermuda and L.P. Gutteridge.

Assets $470 million Capital $25 million Planned rights issue $15 million Shareholders 6,000 Combined income $4.5 million Share of mortgage market 50 percent MORTGAGE MERGER -- Bank of Bermuda president Mr. Donald Lines, front left, shakes hands with L.P. Gutteridge president Mr. David Gutteridge after announcing the formation of Bermuda Home. Looking on from left to right, LPG's Mr. Wayne Jackson and Mr. Francis Patterson, and the Bank's Mr. Arthur Haycock.