Henry Smith sees the international playing field as one filled with opportunities for the Bank of Bermuda.

On July 1, he became chief operating officer of the bank, and in January 1998 he will take over from retiring Charles Vaughan-Johnson as the financial institution's president and chief executive officer.

His story, like that of many Bermudians, includes at least one homecoming.

At age two, he moved with his mother and brothers to the US after his father, Henry (Harry) Smith passed away.

Eleven years later, he visited his grandfather, W.B. Smith.

"When I came back to visit my grandfather, I was struck dead in my tracks by the smell of Bermuda cherries. It was something I remembered.'' He would next see Bermuda about ten years later. Just out of school, he met up with Tom Childs, a former director with the Bank of Butterfield and friend of the Smith family. Mr. Childs urged him to consider a career in banking.

Ultimately, Mr. Smith would be offered a job as a bank teller at the Bank of Butterfield but ironically opted to take a similar job with the Bank of Bermuda in 1973 as they offered a management trainee programme, he said.

As well as Mr. Childs, he recalled Margaret Esslemont, who had headed up the Bank of Bermuda's commercial credit and collection department -- an area of the bank Mr. Smith's father used to run.

"Bermudians find their way back to Bermuda,'' he said.

His next homecoming will be in September when he takes up permanent residence here.

Prior to his appointment as COO, he headed the bank's European operations and was based in London.

The opportunity to work abroad had been invaluable, he said.

From an international perspective, the Bank of Bermuda was viewed with envy, or, in some cases, jealousy, he said.

"We have an extraordinary reputation.'' And it was through that excellent reputation that the bank could continue to grow its business, he said.

Bermudians had to realise that the bank offered them an opportunity to participate in its success -- through jobs and as shareholders, he said.

Many people only saw the retail side of the bank or they saw it as a big money-making institution, he said.

But the Bank of Bermuda's fees were not out of line by international standards and retail banking here was "as good as anywhere in the world,'' he said.

He also said, by international standards, the Bank of Bermuda should be generating about 15 percent return on equity (ROE), he said.

Over the past decade, the bank's ROE has averaged 16 percent but for the five years ending 1995, ROE averaged 13.1 percent.

Part of the reason why the bank's ROE has been below 15 percent was linked to expenses, Mr. Smith said.

The jurisdictions that Bermuda operates in, like Bermuda, were very expensive and there were limitations in terms of the resources the bank could access, he said.

Mr. Smith said that the bank would have to cut down on duplication across its 16 centres of operations.

He also said that as countries continued to build trading blocks, there would be a need for jurisdictions to act as business pathways. And this would present a significant business opportunity for the Bank of Bermuda.

"Trading blocks will have competing interests and it will be difficult for them to negotiate directly,'' he said.

"What I find interesting is the whole question of neutrality. Bermuda, in business, is very independent.

"We are not unduly influenced by a major power and not big enough to threaten any of our customers,'' he said.

NEW CHALLENGE -- Henry Smith.

BUSINESS BUC