Butterfield lists on New York Stock Exchange

Bermuda Premier Michael Dunkley, left, and Butterfield Chairman Everard Barclay Simmons Jr., watch Michael Collins, right, the CEO of the Bermuda bank, ring the bell of the New York Stock Exchange as its shares are listed during its IPO on Friday. - Photo: The New York Stock Exchange via AP

Butterfield Group listed its shares on the New York Stock Exchange on Friday in an initial public offering of 10.6 million shares.

Bermuda Premier Michael Dunkley joined Butterfield CEO Michael Collins in the symbolic ringing of the opening bell of the New York Stock Exchange to mark the start of trading for Bermuda’s largest bank’s stock in the United States.

Butterfield’s shares were offered at $23.50 per share, in the middle of the $22 to $25 range expected before the offering, and the bank started trading at $25.

Speaking to the Cayman Compass from New York, Michael Collins, Butterfield Group’s chief executive officer, said, “We can be proud that a community bank that has roots in both Bermuda and Cayman has been so successful on the New York Stock Exchange. Shares traded up at inception by about 6 or 7 percent. We could not be happier.”

The listing raised about $250 million in a primary and secondary offering and increases the pool of liquidity for the bank and its shareholders. It also provides an avenue for private equity group Carlyle, Butterfield’s largest investor, to exit parts of its investment with the bank.

The IPO was in part necessitated by a March 2010 investment agreement between affiliates of the Carlyle Group and the bank. Under the terms of the agreement, Butterfield agreed to use commercially reasonable efforts to list Butterfield’s ordinary shares on an international stock exchange within a specified time period.

“We agreed to provide liquidity for Carlyle through a listing back in 2010. And this is to allow some of the institutional investors to sell some of their shares, certainly not all of them,” Mr. Collins said.

In 2010, an investor group led by Carlyle and Canadian Imperial Bank of Commerce injected cash into Butterfield to help the bank restructure and “de-risk” its balance sheet, which during the financial crisis was exposed to loss-making investments linked to the U.S. mortgage market.

The offering marks a significant turnaround for the bank since then, and the proceeds raised will help Butterfield to grow further.

“We made three acquisitions in the last two years: a trust company in Guernsey, HSBC’s banking business in Cayman, and then we just acquired HSBC’s wealth management business in Bermuda. So we are growing and we always want access to capital, which the New York Stock Exchange listing will give us,” Mr. Collins said.

Of the $250 million raised, about $140 million comes from the issuance of new shares and will be used for general corporate purposes. Another $110 million from a secondary offering, in which institutional investors sold some of their shares, will increase the group’s capital base and provide funds to potentially consider further acquisitions.

Butterfield’s group CEO sees these buying opportunities mainly in the trust space.

“There is a dislocation in the trust world offshore,” he said, with large banks like Barclays and HSBC disposing of their trust companies. “We have been in the trust business for 70 years. We are extremely well known and private trust is our focus.”

The stable and profitable banking business in Bermuda and Cayman supports these growth ambitions, Mr. Collins stated. “We use capital from that part of the business and that helps us acquire wealth and trust businesses around the world.”

Cayman impact

The listing will also support the bank in the Cayman market, where the group generates about 28 percent of its turnover, compared to Bermuda, which accounts for just over half of the business.

“We have been an innovative bank locally,’ said Mike McWatt, managing director of Butterfield Bank in Cayman. “The added capital will add funding to allow us to continue to innovate, to roll out new products and services for the local market. So we view that as a tremendous positive outcome from the IPO and the additional capital that has been raised.”

Wayne Panton, minister for Financial Services who attended the launch event at the New York Stock Exchange on behalf of the Cayman Islands government, said the listing makes Butterfield a stronger and better capitalized bank.

“It presents them with the opportunity, as a key retail banking provider in Cayman, to be able to increase the level of services. That benefits Cayman consumers,” he said.

In addition to being a significant retail banking services provider, Butterfield provides 300 jobs in Cayman, Mr. Panton added. “Butterfield’s continued success translates into success for Cayman and our economy, as well as Bermuda.”

During Butterfield’s two-week roadshow in New York, Boston, Chicago and the U.S. West Coast before the IPO, senior managers had to explain the Bermuda and Cayman markets and Butterfield as a company to institutional investors.

In those meetings, Mr. Collins said, institutional investors showed a lot of interest and great familiarity with Bermuda and Cayman because of the role they play in the reinsurance, captive insurance and hedge fund industries.

The arduous, year-long listing process and the pitches have helped make Butterfield a better organization, he added.

Butterfield’s New York-listed shares trade under the ticker symbol “NTB.”