v3.25.4
Employee benefit plans
 12 Months Ended
Dec. 31, 2025
Retirement Benefits [Abstract]  
Employee benefit plans
Note 11: Employee benefit plans

The Bank maintains trusteed pension plans including non-contributory defined benefit plans and a number of defined contribution plans, and provides post-retirement medical benefits to its qualifying retirees. The defined benefit provisions under the pension plans are generally based upon years of service and average salary during the relevant years of employment. The defined benefit and post-retirement medical plans are not open to new participants and are non-contributory and the funding required is provided by the Bank, based upon the advice of independent actuaries. The defined benefit pension plans are in the Bermuda, Guernsey and UK jurisdictions, and the defined benefit post-retirement medical plan is in Bermuda. The Bank has a residual obligation on top of its defined contribution plan in Mauritius.

Bermuda Defined Benefit and Post-Retirement Medical Benefit Plan
Plan amendments occurring in 2014 and 2019 resulted in the recognition of new prior service costs on December 31, 2014 and December 31, 2019 on a plan for which substantially all members are now inactive. The Bank has elected to amortize these new prior service costs on a linear basis over 21 years and 16 years, respectively, which was the average remaining life expectancy of members eligible for benefits under the plan at the time of the amendments.

Guernsey Defined Benefit Pension Plan
Effective October 2014, all the participants of the Guernsey defined benefit pension plan became inactive and in accordance with GAAP, the net actuarial loss of the Guernsey defined benefit pension plan is amortized over the then estimated average remaining life expectancy of the inactive participants of 39 years. Prior to all of the Guernsey participants being inactive, the net actuarial loss of the Guernsey defined benefit pension plan was amortized to net income over the estimated average remaining service period for active members of 15 years.

UK Defined Benefit Pension Plan
The UK defined benefit pension plan closed to new members effective April 1, 2002 and subsequently closed to further accrual of new benefits effective October 1, 2012. During the years ended December 31, 2018 and 2017, the pension plan settled in cash the liability of several plan members and an insurance policy was purchased in the name of the trustees of the plan to match the liabilities of remaining members who were pensioners as at March 31, 2016.

Mauritius Portable Retirement Gratuity Fund
Under the Mauritius Workers’ Right Act of 2019, the Portable Retirement Gratuity Fund (the "Fund") was established for the purpose of providing for the payment of a gratuity on the death or retirement of an employee and came into effect on January 1, 2020. The Fund operates as a centralized defined contribution scheme with employers required to make upfront contributions at prescribed rates based on employees' monthly remuneration. Any shortfall in this lump sum gratuity in an employees accumulated fund upon death or retirement, is to be funded by the Bank. Accordingly, the Bank recognizes the related service and net interest costs as well as the related net actuarial liability.

The following table presents the financial position of the Bank’s defined benefit pension plans and the Bank’s post-retirement medical benefit plan, which is unfunded. The Bank measures the benefit obligations and plan assets annually on each December 31 and therefore, the most recent measurement date is December 31, 2025.
December 31, 2025December 31, 2024December 31, 2023
Pension
plans		Post-
retirement
medical
benefit plan		Pension
plans		Post-
retirement
medical
benefit plan		Pension
plans		Post-
retirement
medical
benefit plan
Accumulated benefit obligation at end of year100,397 84,455 99,013 83,578 110,004 88,682 
Change in projected benefit obligation
Projected benefit obligation at beginning of year99,013 83,578 110,004 88,682 106,748 91,983 
Service cost — 43 — 54 — 76 
Interest cost 5,235 4,369 5,134 4,385 5,367 4,786 
Benefits paid (7,901)(2,664)(7,961)(3,324)(7,829)(3,244)
Actuarial (gain) loss 1,122 (871)(7,453)(6,219)3,368 (4,919)
Foreign exchange translation adjustment2,928 — (711)— 2,350 — 
Projected benefit obligation at end of year100,397 84,455 99,013 83,578 110,004 88,682 
Change in plan assets
Fair value of plan assets at beginning of year126,419 — 136,653 — 137,294 — 
Actual return on plan assets 8,950 — (1,501)— 3,725 — 
Employer contribution10,174 2,664 153 3,324 386 3,244 
Benefits paid(7,901)(2,664)(7,961)(3,324)(7,829)(3,244)
Foreign exchange translation adjustment3,781 — (925)— 3,077 — 
Fair value of plan assets at end of year141,423 — 126,419 — 136,653 — 
Amounts recognized in the consolidated balance sheets consist of:
Prepaid benefit cost included in accrued interest and other assets41,037 — 27,417 — 26,661 — 
Accrued pension benefit cost included in employee benefit plans liability(11)(84,455)(11)(83,578)(12)(88,682)
Surplus (deficit) of plan assets over projected benefit obligation at measurement date
41,026 (84,455)27,406 (83,578)26,649 (88,682)
Year ended
December 31, 2025December 31, 2024December 31, 2023
Pension
plans		Post-
retirement
medical
benefit plan		Pension
plans		Post-
retirement
medical
benefit plan		Pension
plans		Post-
retirement
medical
benefit plan
Amounts recognized in accumulated other comprehensive income (loss) consist of:
Net actuarial gain (loss), excluding deferred taxes(45,707)22,291 (48,969)22,022 (51,165)18,114 
Net prior service credit (cost)(253)(5,246)(313)(5,770)(398)(6,294)
Deferred income taxes assets (liabilities)(1,157)— — — — — 
Net amount recognized in accumulated other comprehensive income (loss)(47,117)17,045 (49,282)16,252 (51,563)11,820 
Annual benefit expense
Expense componentLine item in the consolidated statements of operations
Service cost Salaries and other employee benefits— 43 — 54 — 76 
Interest cost Non-service employee benefits expense5,235 4,369 5,134 4,385 5,367 4,786 
Expected return on plan assets Non-service employee benefits expense(6,399)— (6,240)— (6,117)— 
Amortization of net actuarial (gains) lossesNon-service employee benefits expense2,341 (602)2,358 524 2,284 524 
Amortization of prior service (credit) lossNon-service employee benefits expense82 524 79 (2,311)79 (1,333)
Defined benefit (income) expense 1,259 4,334 1,331 2,652 1,613 4,053 
Defined contribution expense8,380 — 8,363 — 8,525 — 
Total benefit (income) expense 9,639 4,334 9,694 2,652 10,138 4,053 
The components of benefit expense (income) other than the service cost component are included in the line item non-service employee benefits expense in the consolidated statements of operations.
Other changes recognized in other comprehensive income (loss)
Net gain (loss) arising during the year1,439 871 (288)6,219 (5,762)4,919 
Amortization of net actuarial (gains) losses2,341 (602)2,358 524 2,284 524 
Amortization of prior service (credit) cost82 524 79 (2,311)79 (1,333)
Change in deferred taxes(1,135)— — — — — 
Foreign exchange adjustment(562)— 132 — (259)— 
Total changes recognized in other comprehensive income (loss)2,165 793 2,281 4,432 (3,658)4,110 
To develop the expected long-term rate of return on the plan assets assumption for each plan, the Bank considered the historical returns and the future expectations for returns for each asset class, as well as the target asset allocations of the assets. The weighted average discount rate used to determine benefit obligations at the end of the year is derived from interest rates on high quality corporate bonds with maturities that match the expected benefit payments.
Actuarial Assumptions
Year ended
December 31, 2025December 31, 2024December 31, 2023
Pension
plans 		Post-
retirement
medical
benefit plan		Pension
plans 		Post-
retirement
medical
benefit plan		Pension
plans 		Post-
retirement
medical
benefit plan
Actuarial assumptions used to determine annual benefit expense
Weighted average discount rate5.56 %5.67 %4.85 %5.16 %5.20 %5.37 %
Weighted average rate of compensation increases1
3.20 %N/A3.20 %N/A3.00 %N/A
Weighted average expected long-term rate of return on plan assets4.97 %N/A5.80 %N/A6.30 %N/A
Weighted average annual medical cost increase rateN/A
6.6% to 4.5% in 2040
N/A
6.8% to 4.5% in 2040
N/A
6.9% to 4.5% in 2040
Actuarial assumptions used to determine benefit obligations at end of year
Weighted average discount rate5.35 %5.48 %5.55 %5.67 %4.85 %5.16 %
Weighted average rate of compensation increases1
3.20 %N/A3.20 %N/A3.00 %N/A
Weighted average annual medical cost increase rateN/A
6.5% to 4.5% in 2040
N/A
6.6% to 4.5% in 2040
N/A
6.8% to 4.5% in 2040
1Only the UK subsidiary plan is impacted by potential future compensation increases.

Investments Policies and Strategies
The pension plans’ assets are managed according to each plan's investment policy statement, which outlines the purpose of the plan, statement of objectives and guidelines and investment policy. The asset allocation is diversified and any use of derivatives is limited to hedging purposes only.
December 31, 2025December 31, 2024
Weighted average actual and target asset allocations of the pension plans by asset category
Actual
 allocation		Target
 allocation		Actual
 allocation		Target
 allocation
Debt securities (including debt mutual funds)72 %73 %70 %74 %
Equity securities (including equity mutual funds)19 %9 %20 %9 %
Other9 %18 %10 %17 %
Total100 %100 %100 %100 %

Fair Value Measurements of Pension Plans' Assets
The following table presents the fair value of the plans' assets by category and level of inputs used in their respective fair value determination as described in "Note 2: Significant accounting policies", except the level 3 security, for which the valuation determination is described following the below table:
December 31, 2025December 31, 2024
Fair value determinationFair value determination
Level 1Level 2Level 3Total
fair value		Level 1Level 2Level 3Total
fair value
US government and federal agencies— 31,191 — 31,191 — 30,748 — 30,748 
Non-US governments debt securities— 41,404 — 41,404 — 39,127 — 39,127 
Corporate debt securities— 28,475 — 28,475 — 19,137 — 19,137 
Equity securities and mutual funds1,491 25,822 — 27,313 1,066 24,790 — 25,856 
Other774 1,334 10,932 13,040 497 833 10,221 11,551 
Total fair value of plans' assets2,265 128,226 10,932 141,423 1,563 114,635 10,221 126,419 
The Level 3 assets consist of insured annuity policies covering the full pension benefits of certain plan members. The fair value of these policies is deemed equal to the actuarial value of the projected benefit obligation for the insured benefits. At December 31, 2025, 19.0% (December 31, 2024: 19.5%) of the assets of the pension plans were mutual funds and equity securities managed or administered by wholly-owned subsidiaries of the Bank. At December 31, 2025, 1.1% (December 31, 2024: 0.8%) of the plans' assets were invested in common shares of the Bank.

The investments of the pension funds are diversified across a range of asset classes and are diversified within each asset class. The assets are generally actively managed with the goal of adding some incremental value through security selection and asset allocation.
Estimated 2026 Bank contribution to and estimated benefit payments for the next ten years under the pension and post-retirement medical benefit plans are as follows:
Pension
plans 		Post-
retirement
medical
benefit plan
Estimated Bank contributions for the full year ending December 31, 2026— 5,544 
Estimated benefit payments by year:
20267,444 5,544 
20277,836 5,744 
20287,486 5,905 
20297,610 6,054 
20307,486 6,175 
2031-203536,784 31,976