Butterfield has cut nine jobs at its Bahamas operation and will trim another eight roles by the end of the first quarter of next year as part of restructuring plans, The Bahamas Tribune reports.

The restructure of Butterfield Bank (Bahamas), which will lead to the closure of the bank’s investments, banking and credit departments, was prompted by its failure to achieve the necessary economies of scale in its private banking and loan portfolio to make the business profitable, the bank’s deputy chairman, Ian Fair, was quoted as having said.

He went on to say however that the bank has “no intention” of shuttering its Bahamas operation and instead will retain a staff of 35 there and continue to look for growth. Fair told the publication the bank would now focus on its wealth management business, including trusts and corporate services.

Butterfield first launched in the Bahamas in 2003 through the acquisitions of Thorand Bank & Trust and Leopold Joseph (Bahamas). But while the firm planned to build a private banking operation like those it has in the Cayman Islands and Bermuda - where the group is headquartered - its plans were scuppered by the onslaught of the financial crisis.

"With zero interest rates, and trying to build a banking business with a small loan book, we don't have the scale, and we do not see where the scale will come from in the current banking environment, Fair is quoted as having said.

Fair was however positive on the Bahamas unit’s wealth management prospects, an area in which he said the firm is “very strong”. Wealth management, trust and corporate services are "where we see the future of Butterfield Bahamas being," Fair said.

When contacted by WealthBriefing, Butterfield confirmed that nine redundancies were made last week, with the remaining eight to come in 2011. "The impacted employees provide client and support services for private banking and lending businesses that the bank will no longer provide from the Bahamas," the firm said in a statement.