Some investors in the Butterfield Bank $200 million preference share issue have been told they will be able to buy only half of what they applied for.

Two investors who called this newspaper yesterday said they had been told that anyone who applied to buy more than $75,000 worth of the shares would receive only 50 percent of what they requested.

Both complained that it had cost them money to liquidate other investments in order to come up with the funds to invest in the Butterfield preferred shares.

The investors' comments appear to indicate the share sale was heavily oversubscribed, apparently all through Island-based investors.

The bank has declined to say how much has been pledged, citing regulatory restrictions.

As reported in The Royal Gazette last Saturday, the bank last week stopped taking applications for the preference shares, which will yield eight percent per annum in dividends to be paid quarterly.

VSB radio news also reported yesterday morning that some investors were not getting the allocation of preferred stock that they had applied for. Asked yesterday about the limitations that some investors have highlighted, the bank said in an e-mailed statement: "As is the case in transactions of this nature, it is not appropriate for an issuer to comment on the value of subscriptions received or specific allocations to particular investors."

The preferred stock sale was staged to raise the $200 million that financial regulator the Bermuda Monetary Authority said Butterfield needs to ensure it can withstand a severe economic downturn.

Government agreed to guarantee the principal and dividends after the bank was unable to raise the capital on the private markets.

One Bermudian investor, who said he had applied to invest "considerably more" than $75,000, said he had been informed of the limitation by phone yesterday.

"I applied on the day of the first information session (June 3)," the man, who asked not to be named, said. "The bank told me it was first come, first served. Alan Thompson (Butterfield's chief executive officer) did not live up to his promises.

"I have taken investments out of other banks and that has cost money. When they go to the secondary market, these shares will probably trade at better than 100 percent, so I could lose another three or four points there."

Another investor, who gave only his first name David, called to say he had applied to buy more than $300,000 of the preferred stock, and had also been told he could buy only 50 percent of what he wanted.

Two other investors, he said, James and Harry, had each applied to invest some half a million dollars.

"We applied for the shares at the first meeting," he said. "This stinks."