"The steps we are taking are part of a plan to put the Bank back on a solid course to improve earnings and enhance shareholder value via a route of increased productivity and efficiency, focused cost management and direct concentration on the core businesses that are at the heart of our historical success and reputation," said President and CEO John Tugwell, who joined the Bank in May. "I am confident that the decisions we are taking are in the best interests of the Bank, our staff, our customers and our shareholders."
The strategic steps announced by the Bank are as follows:
Restructure London Operations: The Bank will pursue a plan that calls for maintaining its Butterfield Securities subsidiary in London, which has responsibility for corporate finance and institutional stockbroking. The Bank will withdraw from its lending and deposit-taking activities in London, with an eye toward completing this by calendar year end 1997. These decisions were predicated on the need to stem losses, which management believe were due largely to insufficient knowledge of, and presence in, the marketplace.
Customers and staff are being notified of the changes being made. The Bank will take all appropriate action to ensure smooth transitions for both. Bank of Butterfield's commitment to serving the European market will continue through its offices in Guernsey and the U.K.
Strengthen the Provisions for Loan Losses: The Bank's management team has determined the need to provide for certain non-performing assets. It will, therefore, increase the loan loss provision accordingly in financial year 1996 - 1997. Details of the increased provision are being finalized and will be enumerated in early August when Bank of Butterfield announces its year end results.
Change the Bank's Structure: With efficiency paramount in a changing business environment, the organisational structure is to be flattened. This has resulted in the elimination of three senior positions within the Bank. The executives concerned have all given the Bank many years of valued service and are thanked for their contributions in the past.
Earlier, Mr. Tugwell appointed from within the Bank two new senior vice presidents, Janet Nearon of Human Resources and William G. Francis of Information Systems.
He also formed a new Strategic Management Unit.
Redirect Resources: The Bank's management will continue to pursue a course of prudent cost management throughout the group. At the same time, capital and resources will be redirected to the strategic development of core businesses, along with improving efficiency and customer service. We anticipate a much improved performance for the current year.
Year End Results: Mr.Tugwell said "all of these actions in Singapore, the U.K. and Bermuda will result in net savings for the Bank. In the short-term, however, there will be associated costs which will result in materially decreased profits for the year just ended. These results will be announced in early August, after the late July Board meeting."
Bank of Butterfield is a $4.4 billion organization founded in 1858. It has its headquarters in Hamilton, Bermuda and offices in Grand Cayman, Guernsey, Hong Kong and the United Kingdom. Bank of Butterfield shares trade on the Bermuda Stock Exchange.
CONTACT:
Steve L. Marklew
Senior Manager
Marketing Bank of Butterfield