Bahamas contributes$4m to Butterfield’snet loss
Bank of NT Butterfield&Son Limited posted another annual net loss over$200 million, with The Bahamas division of its operations kicking in$3.96 million to the net loss.
The consolidated net loss for the Bermuda-based bank for the year ended December 31, 2010 was$207.6 million, about 3 percent less than the previous year’s loss of$213.4 million. Locally Butterfield went through some downsizing last year and is reducing its private banking and credit operations, but the bank is reporting that its consolidated losses will not impact the bank’s intention to continue in The Bahamas.
“The losses will not have any impact on the plans at all,”Robert Lotmore, managing director at Butterfield Bank(Bahamas)toldGuardian Businessyesterday.”Butterfield has the intention of remaining in The Bahamas, and as previously stated we will be continuing trust and fiduciary business, and will no longer provide any lending and minimal banking facilities.”
Lotmore confirmed that the bank would reduce staff by another eight people, most by the end of March, but that all the persons to be affected were aware and there would be no’surprises’at this point. According to him, staff have been aware of the plans since the bank’s initial communication to them on the subject in September 2010.
For fiscal 2010, Butterfield(Bahamas)had$3.85 million in revenue before gains and losses, generated from non-interest income of$5.2 million, customer net interest income of$2.2 million, but reduced by a provision for credit loss of$3.67 million. For the 2009 fiscal year the bank’s revenue before gains and losses were$7.9 million, but no provisions for credit losses were posted during that fiscal year. Total expenses for 2010 were$7.81 million, up slightly from$7.02 million the previous year. Despite similar revenue and expenses across the periods, the credit loss provision shrunk net income significantly, contributing to an increase from a net loss of$0.1 million last year to a net loss of$3.97 million this year.
“We are in the process of transferring the credit business to one of our related divisions and so we don’t expect that we will be continuing to reflect any major losses[this year], as we will not have that business on our books,”Lotmore said. He added that the underlying reason behind the large credit loss provision was the impact of the recent global economic downturn on the bank’s credit business. The bank’s credit book consisted of mortgages to international clients for properties that were largely second or third homes, according to Lotmore.
According to the bank’s consolidated financials, The Bahamas had on-balance sheet credit exposure of$69.3 million and an off-balance sheet amount of$1.7 million for a total credit exposure of$71.1 million at December 31, 2010. These were down from$76.3 million,$5.3 million and$81.7 million at the previous year-end, respectively. Total assets for The Bahamas came in at$146 million at December 31, down from$166.5 million the previous year.
The consolidated losses Butterfield suffered were attributed to non-recurring losses taken as a part of the bank’s strategy to de-risk its balance sheet, according to a news release from the company on February 22.
“2010 was a year of building a strong foundation amongst challenging economics, starting with the successful capital raise bringing in new investors and an oversubscribed rights offering to our historical investor base. The resultant strong capital base and good liquidity position allowed us to finalize the process of ridding the balance sheet of problematic assets and putting realizable values on remaining assets. This leaves us with a strong capital base to withstand continued uncertainty in the global economic outlook and to support growth as our economies recover,”said Brad Kopp, Butterfield’s president and chief executive officer.
The consolidated financial statement is denominated in Bermudian dollars, which like the Bahamian dollar is essentially on par with the U.S. dollar.