Banking setback

Bermuda’s two biggest banks have been downgraded by Stand & Poor’s Ratings Agency due to the island’s ongoing economic struggles.

Yesterday afternoon S&P lowered the ratings on the Bank of Butterfield from A- to BBB+ and on HSBC Bermuda from A+/A-1 to A/A-1. 

S&P said: “… risks for Bermudian banks have increased in recent years, largely due to the departure of several thousand expatriates, increased unemployment, and an extended downturn in the real estate market.”

A spokesperson at HSBC Bermuda said: “Overall, this was an expected result given Bermuda’s anchor rating was similarly lowered by one notch, and in light of continued difficult economic and trading conditions”

Brendan McDonagh, Butterfield’s Chairman and Chief Executive Officer, said: “Despite ongoing economic difficulties in Bermuda, Butterfield’s profitability continues to improve, contributing to our capital strength. Our Total and Tier 1 regulatory capital ratios of 22.6 per cent and 18.4 per cent, respectively, remain very strong compared to our peers and well in excess of regulatory minimums.”

S&P said that Butterfield “…has performed better than its local bank peers over the past two years in terms of loan performance” and raised its assessment of Butterfield’s risk position to “adequate” from “moderate”.