Butterfield re-brands wound-down UK private bank biz as new mortgage operation

Butterfield re-brands wound-down UK private bank biz as new mortgage operation

Bermuda-based Butterfield Bank – which last year listed on the New York Stock Exchange – said it has completed an “orderly” wind-down of its London-based private banking business, but that it plans to continue to operate in the UK market as a provider of high-net-worth residential mortgages.

It will offer these mortgages through its  existing UK subsidiary, which has changed its name to Butterfield Mortgages Ltd from Butterfield Bank (UK) Ltd, the bank said in a statement.

Although it will no longer be regulated by  the UK’s Prudential Regulation Authority, it will continue to be regulated by the Financial Conduct Authority, the bank said.

Alpa Bhakta has been named to head up the operation, as managing director of Butterfield Mortgages. Previously she had been head of European Lending at Butterfield Bank (UK) Ltd, from 2012, after having joined the banking group in 2011 as head of property finance.

As reported, Butterfield announced last February that it would wind down its private banking business in the highly competitive London market, in order to focus on operations in other jurisdictions with greater potential for growth. The business was based in the City of London. Its new offices are located on Cornhill, also in the City, near that street’s intersection with Bishopsgate.

According to Butterfield chief executive Michael Collins, pictured below, as the winding-down of the London private banking operation took place, the entity that was to become Butterfield Mortgages “retained a highly experienced team of residential mortgage specialists, with strong connections in the London real estate market, developed over many years”.

And now, “as part of our global wealth management service, we will continue to assist high-net-worth families, based in the UK and internationally, with the acquisition of unique properties in the most desirable neighbourhoods in central London”, he added.

“From a balance sheet perspective, Butterfield Mortgages Ltd will provide our highly liquid Guernsey bank with low-risk, floating rate sterling loans to invest its sterling deposits.”

Established offshore banking name 

The Butterfield name is one of the oldest in offshore banking circles. The bank grew out of a Bermuda trading company founded by Nathaniel Butterfield in 1758; Butterfield’s son, Nathaniel T, expanded the business to include financial services. By 1951 it had become the largest Bermudian-owned and held company in terms of per capita owners.

In the 1960s and over the intervening decades Butterfield developed its international business, opening an office in Barbados in 2001, and in 2004, acquired a City of London merchant bank, Leopold Joseph.

The bank’s shares have been listed on the Bermuda Stock Exchange since 1971.

In 2014, the bank acquired Guernsey-based Legis Group Holdings Ltd and, later the same year, parts of the corporate and retail banking business of HSBC’s Cayman Islands business. In October 2015 it acquired Bermuda Trust Company Ltd and the private banking investment management operations  of HSBC Bank Bermuda Ltd.

Butterfield’s listing of 10.6 million shares on the New York Stock Exchange last September was aimed at raising US$250m, and was said by the company to be aimed at increasing its liquidity as well as to provide its largest investor, the private equity Carlyle group, with the opportunity to exit part of its investment.

However, as reported, Collins was also quoted as saying that some of the funds raised in the IPO would be used to acquire trust businesses that would complement its existing offerings in the trusts area.

On its first day of trading on the NYSE last year, Butterfield saw its shares close at US$24.75, 5.3% above the IPO price target of US$23.50. The shares closed yesterday at US$32.20.