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Bermuda: Bank's 60/40 Exemption Paves The Way For More Applications

Mairi Mallon, Royal Gazette

15 December 2000


This story is reproduced by kind permission of the Royal Gazette at http://www.accessbda.bm

The decision by the Minister of Finance to allow an exemption to Bank of Bermuda from the 60/40 rule will inevitably lead to other applications being made to Government from different sectors, according to a leading businessman.

David Ezekiel, head of the International Companies Division of the Chamber of Commerce praised Eugene Cox's decision as being balanced and fair and said Bermuda had to become more flexible in an increasingly global economy.

He said: "The Minister's approach was well reasoned and appropriately formulated. It recognises differences in different business sectors and has responded to that.

"What we could face is applications from different sectors of the business community. We are all faced with similar business decision on a daily basis and have to make a decision on the facts. But the Minister has set out criteria to judge other companies. As long as decisions are made in that frame work all businesses will be protected."

He said he found interesting the list of conditions for granting the licence and said some would not be easy to implement, in particular the first condition. He said the bank already had most of the licence terms in place already.

"In what is now a new global economy the old blanket formula-driven rules do not have any place," he added. "We have got to be a lot more flexible than I think we ever were. I agree with the Minister that it is in the Island's best interest to have a healthy banking sector, a sector which is so important to the community.

"I think the Minister has used his powers appropriately and it will certainly invite other applications and each needs to be judged on its merits. I believe his decision should and will have widespread support."

The Chamber's director Diane Gordon added: "We're certainly delighted that Government has provided for their needs. Every single division of the Chamber of Commerce has individually discussed the 60/40 issue but as a whole we are certainly delighted that Government has provided for the needs of the Bank of Bermuda."

Bermuda International Business Association chairman Raymond Medeiros also welcomed the move, saying: "We are very pleased with the news about Bank of Bermuda's exemption. From the perspective of international business, the 60/40 rule as it currently stands is somewhat anachronistic. In today's business world, mergers and acquisitions are being used to extend business operations, create new opportunities and enhance competitive advantage."

"It is only appropriate that companies in Bermuda should take advantage of these opportunities."

Shadow Finance Minister Grant Gibbons said the Opposition supported the move but he said the PLP had said three to four years ago that it was wrong to pass these things on a one-off basis.

Dr. Gibbons said: "I am thus surprised today in the Minister's speech we are again dealing with this on a one-off basis."

He urged the Government to make a general statement on its policy and he pointed out that financial institutions other than banks took a keen interest in developments. He said: "What's extraordinary at this point is that there has not been a broader policy document, maybe a Green Paper which sets out the Minister's position."

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