Overview of Bermuda’s Banking Sector
Bermuda is not considered an international banking center and only banks licensed by the Bermuda Monetary Authority (BMA) under the Banks and Deposit Companies Act 1999 (BDCA) are entitled to undertake banking businesses in or from Bermuda. As banking is defined as deposit taking (as opposed to lending), international banks are generally able to lend to Bermuda-based borrowers subject to applicable restrictions relating to carrying on business in Bermuda.
The following banks hold full banking licences in Bermuda: HSBC Bank Bermuda Limited; The Bank of N.T. Butterfield & Son Limited; Clarien Bank; Bermuda Commercial Bank. Jewel Bank (which proposes to provide banking services to digital asset businesses) has received a licence under the BDCA but has not yet commenced business in Bermuda.
Banking Regulatory Regime
The BMA is the financial regulator in Bermuda responsible for the regulation and supervision of banks. It also acts as controller of foreign exchange and supervises Bermuda’s anti-money laundering and anti-terrorist financing regime.
The key statutes and regulations applicable to banks in Bermuda include the following (which have been supplemented by guidance notes and policy updates from time to time):
- The BDCA
- The Bermuda Monetary Authority (Financial Institutions) (Control) Regulations 1994
- The Banks and Deposit Companies (Reporting Accountants) (Facts and Matters of Material Significance) Regulations 2006
- The Proceeds of Crime (Anti-Money Laundering and Anti-Terrorist Financing) Act 2008
- The Proceeds of Crime (Anti-Money Laundering and Anti-Terrorist Financing) Regulations 2008
- The Proceeds of Crime Act 1997
The BDCA requires banks to meet on an ongoing basis minimum licensing criteria, including maintaining capital and financial resources commensurate with the nature and scope of their activities. In particular, the BMA requires Bermuda banks to comply with capital and liquidity regulatory requirements consistent with Basel III.
Bermuda banks are prohibited from providing any services other than the business of banking or dealing in money or securities. Whilst there are no specific regulations that restrict banks from entering into proprietary trading activities for their own account, they may only do so:
- to the extent this is consistent with carrying on their core banking business in a prudent manner;
- provided the proprietary trading activities are consistent with the risk profile of the bank;
- in a manner that does not undermine the bank’s Basel III minimum capital and liquidity requirements; and
- provided the assets held by the bank for its own account are properly risk weighted and duly reported to the BMA as part of the bank’s periodic regulatory returns.
The BMA has close connections to a number of supra-national regulatory regimes and supervisory/advisory bodies, including:
- the Caribbean Financial Action Task Force, of which Bermuda is a member
- the Organisation for Economic Co-operation and Development
- the International Association of Insurance Supervisors and the International Association of Securities Commissions
- the Basel Committee on Banking Supervision
Recent and Upcoming Developments
Recent regulatory changes affecting banks in Bermuda include the following:
- the requirement for Bermuda banks to abide by the capital and liquidity regulatory requirements consistent with Basel III;
- the requirement for Bermuda banks to comply with the Large Exposure Framework as a backstop and complement to risk-based capital standards; and
- the relaxation of the bank licensing requirements for banks operating in the Fintech sector /the amendment of the BDCA to accommodate the registration of new banks focused on the Fintech sector.
Looking forward, the BMA’s 2026 Business Plan sets out to strengthen and diversify Bermuda’s banking sector. As the industry continues to implement digital banking solutions, the BMA intends to explore proactive approaches that foster innovation while maintaining their commitment to financial stability and customer protection. In particular, the following goals have been prioritized by the BMA:
- generally updating the BDCA
- exploring an updated Special Resolution Regime for banks
- preparing to implement and supervise the Operational Resilience and Outsourcing Code for regulated entities licensed under the Banks and Deposit Companies Act 1999
Appleby’s Expertise and Leadership
Appleby’s highly experienced lawyers have an extensive range of expertise and provide comprehensive, practical and commercially minded legal advice on all matters related to Bermuda’s evolving regulatory regime.
We have extensive experience in advising on all aspects of financing transactions, including:
- secured and unsecured lending
- capital markets
- trade finance
- structured finance
- project finance including energy and infrastructure projects and telecommunications ventures
We regularly advise international banks in connection with derivatives transactions and provide the ISDA industry netting opinion for Bermuda.
Appleby advises major banks and financial institutions, ship and aircraft owners, lessors, and lessees and we have deep and trusted relationships with many international law firms and financial institutions around the world.
For further information, please contact:
David Clark, Partner, Appleby
dclark@applebyglobal.com
