Bank Of Bermuda Loses $30 Million In E-Commerce Ventures

by Amanda Banks,Tax-News.com, London

07 July 2003

According to a report from the Royal Gazette, the Bank of Bermuda lost in the region of $30 million after entering into partnership with two e-commerce start-up firms - FirstEcom and Measurisk - between 2000 and 2002.

The bank entered into a 50-50 arrangement with FirstEcom to create an independent third party electronic payment processing operation, known as First E-commerce data services (FED) which was licensed by both Visa and MasterCard. The service was designed to be a one stop shop for online transaction processing for banks and merchants offering authorisation, settlement data transmission and transaction reporting, and offered a host of other services.

The bank also supplied capital for an online risk management tool known as Measurisk, in partnership with Morgan Stanley, XL Capital and Micro Modelling Associates, which was built to assess certain high risk investments. The details of this venture are less clear, although it is known that the bank's involvement in the two ventures combined cost it $26 million in bad debt write offs.

Adding insult to injury, it also emerged from the Bank's 2001 report that it lost nearly $5 million through fraudulent credit card transactions. Whilst there is no evidence that any fraud took place in Bermuda itself, under Visa and MasterCard rules, banks involved in the processing and settlement of such transaction must foot the bill if fraud occurs.

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