Capital G Bank Ltd and First Bermuda Group (FBG) this afternoon announced the signing of a Memorandum of Understanding outlining the preliminary terms of a merger between the two institutions.

The newly combined full service bank, positioned under the Capital G corporate identity, will create a privately held financial institution with deposits in excess of $1.2 billion, a loan portfolio of $950 million and a team of more than 200 employees.

Earlier this year, Bermuda Commercial Bank agreed to merge with FBG, but that agreement expired in June without being finalised, which allowed this move to take place.

This afternoon James Gibbons, Chairman of Capital G Bank Limited, said: “We are very pleased to be able to merge with an institution such as FBG that has built a strong reputation in Bermuda over the last 20 years.

“FBG has a loyal client base that has trusted them to provide personalized savings, loan and wealth management solutions during that period of time. Capital G’s focus has always been on the financial needs and success of the residents of Bermuda and FBG has taken a similar approach, which makes this transaction particularly rewarding for both institutions.”

Mr. Gibbons added: “One of the most important aspects of the merger is the retention of the majority of the FBG workforce. A successful transition can only be more successful by capitalizing on the talent already available at FBG.

“The merger presents a significant opportunity for us to grow the bank’s business in a short time frame in a cost effective way while also demonstrating Capital G’s commitment to the Bermuda market and our mission to be a leading provider of financial services on the Island.”

FBG has been in operation since 1990 and as of March 31, 2010, held more than $206 million in deposits. The operating divisions of FBG include First Bermuda Savings & Loan and First Bermuda Securities.

Eugene Bean, Chairman of FBG, said: “As we celebrate our 20th anniversary, First Bermuda Group is pleased to be announcing today this proposed merger. Capital G is a well-established financial institution with a culture that is very similar to that of FBG’s. We also believe that the service provided by Capital G is commensurate with the service that our customers have come to expect so we believe that a merger with Capital G would be seamless to both our employees and customers.”

“We look forward to working with the team at Capital G to conclude this deal.”

It is exxpect that the merger will be completed within the next six weeks.

Full story in tomorrow’s business section