The firm now known as Butterfield Bank is Bermuda's oldest banking company. It traces its origins back to a firm founded by Nathaniel Butterfield in 1758. Originally established to trade cedar, wine and other dry goods, the company gradually started providing financial services to its suppliers and customers. A century later, financial transactions dominated the business of the company, and in 1858, under the direction of the founder's grandson, Nathaniel T. Butterfield, the firm became the Bank of N.T. Butterfield and Company. In 1865, '& Son' was added to the bank's name, and in 1904 it was incorporated as the Bank of N.T.Butterfield & Son Limited under a Special Act of Parliament.
Today, Butterfield Bank is well known for a wide array of businesses including retail and corporate banking, fiduciary services, fund administration, private banking and asset management. The group's 1,500 employees stretch from Bermuda to offices in the Bahamas, the Cayman Islands, Barbados, Guernsey, Switzerland, Canada and the UK as the bank prepares to celebrate its 150th anniversary next year.
The Butterfield Fund Services business, which was launched in 1969 and is now led by senior vice-president Frank Sebestyen, has shown remarkable growth over the past few years. In addition, recent regulatory changes introduced by the Bermuda Monetary Authority through the Investment Funds Act have made business conditions more amenable. The Bermuda operation administers 400 funds with USD35.5 billion of assets, numbers that indicate the island's strength as an offshore hedge fund jurisdiction.
The rapid growth in hedge funds and other alternative investments is a unique opportunity for Butterfield Fund Services to expand its fund administration business significantly over the next few years, with a further 30 per cent increase in business targeted over the next 18 months through geographic growth and increased marketing efforts. Being part of a bank, the fund services business can offer a one-stop shop to clients including compliance, currency hedging, line of credit, leverage, cash management and custody services.
Butterfield Fund Services is anticipating additional inflows of new business as institutional investors increasingly demand enhanced corporate governance and thirdparty administration. Unlike some of its competitors, the group is still very much interested in the USD50m to USD200m funds as well as multi-billion-dollar vehicles. While other administrators take on only the biggest funds, Butterfield Fund Services believes it can offer excellent customer service to smaller funds and still maintain a strong business plan.
Butterfield Fund Services has a number of strengths that make it an attractive choice. First, it has a highly educated and experienced staff, maintains a low staff turnover rate and motivates its top talent to succeed within the organisation. Secondly, comprehensive internal control policies and procedures ensure that proper checks and balances protect the company and its clients. Thirdly, sophisticated IT systems in both accounting (Advent Geneva) and shareholder services (NTAS) are vital to compete in today's expanding hedge fund industry. The company is also continuing its overseas expansion. It is looking at opening a marketing office in New York to direct more business to all its servicing locations, and in March this year opened its first onshore North American service centre in Halifax, Nova Scotia. Butterfield Fund Services (Canada) has already taken on a dozen employees whose mandate is to help alleviate the workload of their colleagues in Bermuda and Cayman.
Douglas Lang is managing director of Butterfield Fund Services (Bermuda)
