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Burt lashes out after Butterfield job losses

National priority: David Burt, the Premier, vowed to diversify competitiveness in the banking sector after 11 lost their jobs at Butterfield Bank yesterday (File photograph)

David Burt said yesterday that the Bermuda Government would intensify efforts to open up the banking sector to competition after 11 people were made redundant at Butterfield Bank.

The Premier’s comments came after Butterfield announced yesterday morning that its Rosebank branch had closed and that 30 people had accepted voluntary early-retirement packages in addition to the redundancies.

“It is clear that Bermuda requires greater diversification in the banking sector to create more employment opportunities for Bermudians and more banking choices for Bermudian consumers,” Mr Burt said in a statement last night.

“Consequently, the Government will increase our efforts to diversify our banking sector as a matter of national priority.”

Earlier, in an interview posted on TNN’s Facebook page, Mr Burt said the way in which the 11 staff were told they were being let go was “not in keeping with the best level of corporate responsibility”.

Butterfield had informed the Government of the redundancies in a letter to Wayne Caines, the immigration minister, received on Tuesday evening, Mr Burt said.

A bank spokesman told The Royal Gazette yesterday that the affected staff were told in person by senior management staff that they were being let go.

“Each impacted employee was given the opportunity to meet one-on-one with a human resources representative to receive information about his or her severance payment, extension of banking and medical insurance benefits, and other support the bank is providing,” the spokesman said.

“Affected employees are being treated fairly and with respect.”

Mr Burt mentioned how the Government helped Butterfield to recapitalise in 2009 when it was reeling from hundreds of millions of dollars of losses from investments linked to US mortgages. The Government guaranteed a $200 million issuance of preference shares.

Mr Burt said: “The Government of Bermuda supported Butterfield Bank at its lowest. Our guarantee helped the bank to make sure it could carry on. When the bank is at its highest, when it’s raising mortgage rates and making it more difficult for Bermudian families to make ends meet, and when they’re raising fees on customers, to see this action on the back of all that is a disappointment.”

In February, Butterfield announced profits of $195.2 million for 2018, up by almost $42 million from 2017.

Butterfield responded that a strong, profitable banking sector was key to Bermuda’s ability to attract foreign capital and added it was proud of the bank’s progress over the past decade.

It added that the Government made a profit on the guarantee.

“We are appreciative of the support of the Government of Bermuda through their guarantee of our 2009 preference share offering for which they received a guarantee fee payment of $1.8 million per annum from the bank,” the spokesman said. The shares were redeemed in full in 2016.

The spokesman added: “Our strong earnings enable Butterfield to generate the capital necessary to keep depositors’ money safe, and to provide employment and development opportunities to 537 individuals in Bermuda, 92 per cent of whom are Bermudian.”

In his TNN interview, Mr Burt also questioned why mortgage rates were so high.

“There is no reason why in Bermuda we are paying more for our mortgages than they are in the Cayman Islands,” he said. “There is no reason for that. I believe Butterfield offers mortgages in both places, but the interest rates are different. Why is that?”

He said the answer was greater competition. The Ministry of Finance is working on legislation to diversify banking options, Mr Burt added, in areas including the private banking and trust sectors.

The hope is that newcomer institutions will provide opportunities for those who had lost their jobs to regain employment.

Butterfield said there were several reasons for differing rates in Cayman and Bermuda, including housing market characteristics, lending risks and value trends.

It added that rates in the Cayman moved “in lockstep” with rate changes by the Federal Reserve, the US central bank, while in Bermuda that was not always the case.

Butterfield’s owners are predominantly international, mainly large asset management firms and mutual funds. Its shares started trading on the New York Stock Exchange in September 2016.

Mr Burt said: “We live in a changing global economy and the sad part about that is that Butterfield, which is reporting record profits, is subject to the whims of their investors on Wall Street, so the level of local responsibility to the Bermuda economy is not there as much as it used to be.”

The Premier added last night: “I have asked the minister responsible for workforce development to make available the full array of services at her disposal to ensure that the affected employees are aware of and where applicable, paired with suitable employment opportunities, training or retraining needed to get them back to work.”