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Bank Of Bermuda Opens Up Fund Management In Japan

by Mary Swire,, Hong Kong

03 September 2003

Bank of Bermuda announced yesterday that its Global Fund Services (GFS) division has opened a branch office of a new wholly-owned subsidiary in Japan. Bermuda Global Fund Services Limited, Tokyo branch, will be located in Tokyo and will act as the liaison between Bank of Bermudas GFS division worldwide and its clients in Japan. The office will be headed by Hideki Hashiguchi and will promote the fund administration services of other Bank of Bermuda Group offices to offshore investment vehicles that are promoted, distributed and/or managed by Japanese institutions.

At the end of July, Bank of Bermuda said that its Global Fund Services Division (GFS) is launching a joint venture with South African-based Investment Data Services (IDS) which will offer third party fund administration services to the growing South African alternative investment industry. The new venture, Global Fund Services (South Africa) (Pty) Limited will be majority owned by the Bank of Bermuda, but will be based at IDS's Cape Town premises. It will provide specialised fund accounting and valuation, sales and marketing, relationship management, and legal and compliance support to alternative investment funds incorporated in South Africa.

Earlier in July, the Bank announced second quarter diluted earnings per share of $0.71, compared with $0.73 in the previous quarter and $0.65 in the same quarter of 2002.

Edward H. Gomez, Chief Financial Officer, commented: "Non-interest income was up 8% from a year ago, and at a record level. This demonstrates the value of our diversified revenue lines, as interest earnings continue to be challenged. Our largest business, Global Fund Services, generated both record fees and assets under administration as it continued to win new clients and the value of its existing clients’ assets benefited from market increases. Foreign exchange earnings were also up sharply on the strength of higher volumes and volatility. The very low interest rates continue to limit our opportunities to improve margins on the reinvestment of our clients’ deposits. The decline in interest earnings from the year-ago quarter, however, is primarily due to a smaller outsourced trading portfolio in the current quarter. We reduced the size of this portfolio in late 2002 to improve earnings stability as, although the portfolio has outperformed our internally-managed assets over the long-term, its quarter-to-quarter performance can vary."

The Bank is said to have 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.

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