Butterfield Bank has commissioned an independent review of its own management structure after a tumultuous period which culminated in a $200 million capital raise.

Butterfield chairman Robert Mulderig told shareholders at the company's annual general meeting yesterday that the board and management had to be responsible for last year's hefty investment losses and could not entirely blame the US housing slump and the global financial crash.

The 90-minute AGM at the Bermuda Underwater Exploration Institute ran almost twice as long as has been normal in recent years, as shareholders took the opportunity to question bank bosses on an 18-month spell that has seen hundreds of millions of dollars in realised and unrealised losses, a plunge in bank's share price and a halving of its quarterly dividend.

Only shareholders were allowed into the meeting and Mr. Mulderig described their mood as "very supportive" for the most part, given the circumstances.

"We are in the process of critically examining the composition, structure and governance process at the board level, as well as our management team structure, risk management, compensation and other matters," Mr. Mulderig said.

"This process has already led to significant changes. In addition the board has commissioned an independent review of these matters and we expect to be receiving recommendations of this review panel soon."

He added that the board's intention was "to ensure that Butterfield's governance processes are in line with global best practices and aligned to shareholders' interests".

Among the managerial changes already seen has been the July departure of Ian Coulman, who was managing director of Butterfield Asset Management in Bermuda. Many of his former responsibilities will be taken on by a new group chief investment officer, David Stewart.

Working from his base in London, Mr. Stewart will oversee the group's asset management business across the eight jurisdictions in which the bank operates.

The bank's management was also bolstered by the recruitment of Michael Collins, previously chief operating officer of the Bank of Bermuda HSBC, as executive vice-president of corporate development.

The number of directors on Butterfield's board has also decreased from 13 to 11 following the retirement of Glenn Titterton and Graham Brooks.

Realised and unrealised losses in Butterfield's held to maturity investment portfolio totalled $151.8 million in 2008, made up of write-downs on investments with exposure to US residential mortgages and investments in other banks. Many banks around the world suffered similarly.

In June, Butterfield launched a successful preference share offering to raise $200 million [EmDash] money it needed to comply with enhanced capital requirements imposed by financial regulator the Bermuda Monetary Authority to ensure the bank could withstand a severe economic downturn.

Yesterday on the Bermuda Stock Exchange, Butterfield shares closed on $5. Just a year ago, they were trading at more than $14.

In his speech to shareholders yesterday, the bank's CEO Alan Thompson said of the bank's financial performance over the past year: "Clearly, although largely reflective of world events that were beyond our control, these results are disappointing.

"I know I speak for the entire management team when I say this is not where we want to be and we are making the kind of changes that are necessary to restore the bank to a healthier financial position."

Investors were receiving a 16-cent quarterly cash dividend for the first half of last year, but that has since been slashed to eight cents [EmDash] four cents of which is paid in the form of shares.

After the AGM, Mr. Mulderig said in an interview that it was unlikely the dividend, on which many Bermudians rely for part of their retirement income, would bounce back to its previous levels any time soon.

"As earnings of the bank start to rebound, we would expect to see an increase in dividends happening," Mr. Mulderig said. "But that's unlikely to happen in the short term."

Mr. Thompson said that the bank was emerging from perhaps the most challenging period in its 150-year history with high customer retention. He put that down to the bank's high level of customer service.

With the US housing market showing signs of stabilising, some of the troubled assets held by Butterfield have started to recover their value. In the second quarter of this year, the bank saw a $51 million improvement in the difference between the book and market value of assets in the held to maturity portfolio [EmDash] a positive trend that Mr. Thompson said yesterday is continuing in the third quarter.