plan to combine the Bank of Bermuda and a major real estate firm.

But Minister of Finance the Hon. David Saul said on Friday there was no "merger'' or anything illegal about the Bank of Bermuda's mortgage and finance division's buy out of L.P. Gutteridge Mortgage and Finance Ltd. Dr.

Saul was replying to questions from Shadow Finance Minister Mr. Eugene Cox, in the House of Assembly.

Mr. Cox asked the Minister to give the Attorney General's findings on research into the legality of the proposed link between the Bank of Bermuda and L.P.

Gutteridge.

Dr. Saul said: "The proposed `merger' is not in fact to take place. the Ministry of Finance has been advised that Bermuda Mortgage and Finance is to acquire the shares of L.P. Gutteridge Mortgage and Finance Ltd. and will therefore buy out the company.

"The mortgage portfolio held by L.P. Gutteridge will be acquired by Bermuda Mortgage and Finance. The Attorney General has advised that no consent under the Companies Act 1981 is required for these steps, nor is any consent required under the Deposit Companies Act.'' He added that L.P. Gutteridge is to seek the authority of its depositiors to transfer their deposits to the other company. When this is completed the deposit company licence will lapse. Dr. Saul said: "No special consents are required for this to take place.'' When the buy-out is completed the name of the company will be changed to Bermuda Home.

Dr. Saul said: "In short there is nothing illegal here and no consents are required for the acquisition.'' Mr. Cox asked if any legislation would be brought forward to govern and control such deals.

Dr. Saul said: "The Government, working in cooperation with the Bermuda Monetary Authority, is considering making regulations under section 29 of the Bermuda Monetary Act 1969 to give effect to recommendations made by the Basle Committee on Banking Supervision.

"Specifically, under such regulations, financial institutions would not be able to acquire, establish or maintain inside or outside of Bermuda any branch, without first obtaining the written approval of the Bermuda Monetary Authority. The term `branch' includes a subsidiary.''