BANK OF NEW ZEALAND

Ashburton Guardian, Volume VII, Issue 1961, 4 October 1888, Page 2

BANK OF NEW ZEALAND

THE INVESTIGATION COMMITTEE'S REPORT. (PRE PRESS ASSOCIATION.) Auckland, October 3 At a special genoral moetlnpr of tho shareholders of theßmkof New Zealand, hold today at the banking hoaee, Queen street there w»B a crowded attendance, Mr G. Buckley, President of the Board of Directors, occupied tho ohalr. Before the business osmmenced It was ascertained that the meeting was properly constituted and that over 60,000 snareß were represented In person or by proxy. The report, whloh had been unanimously deoided upon by the Shareholders Committee, was read by tho Chairman of Committee, Mr Justice GllHei, as follows : —

"Our appointment implied widespread onxiety on the part of the shareholders to have an independent aacuranca of the Bank's real position, Thnnks to tho provision of the Inspector and tho efficiency of the Bank's staff our work wns facilitated and wo were soon able to assure ourselves of the soundness of the Bank m roßpeot of ablity to meet its liabilitiep, a conviotion which further examination confirmed, but at the same time we found the position so eminently unsatisfactory to shareholders that the circumstances required enlarged interpretation of our commission and mature consideration, hence tho delay m the presentation of tlie report. Our examint'on disclosed many securities to ? u PP° r * , weak ncoounte, the value of which had fallen greatly, and m»oy aooountß m liquidation or which ought to be, the cover for which had become obviously inadequate, altogether involving losses tho directors had not faced, which, on vigorous examination, will aosorb the reserve lund and noarly one third of the Bank's paid up capital. The data supplied to us are et a clear and exhaustive oharaoter, amply aulhentloated, and after minute and careful examination of the v/irioua ncoounta and assets wo areaatiaHed that under good management and judicions realisation of eejunties, the amount namod should cover all losses. It is obvious to us that for years the Bank hee been paying a rate of divideni it ought not to have paid • securities have been l^ld and accounts k-pt going m the vain hope of recovery to the values placed upon them, m what was, m faot, a period of inflation, and euperven- > ing upon thie heavy Iqisob m Australia

brought matters to the climax we have ' now to face Wo next explain tho measures which, upon conference with tho Directors, we think should be adopted to reahhilitate the Bank. Tho nocessity for radical chungea m tho administration, and for increase m the Bank's capital became immediately apparent to us, and we now hero obsorve that through donths and retirements the di'rectora'e aod general management have already been reconstituted. &o much capiial being lo3t it mU3t be written off and charon redu od from £10 to £7, leaving £700,000 of paid up capital ando ne million of reeervo liability. It ia proposed to take authority to create 100,000 new elvircß and to issue 50,000, thereby bringing the paid up cipiiul to £1,200,000 and the reserve liability to £1,500,000. We are pleased to be able to announce that applications have already been eeoured m London for 20 000 shares by firnn and parsons of the very highest financial standiug, which not only ensures tho success cc the isaua but gains for the Bank new connections which the Directora value highly and will do their utmost to strengthen. Applications could have been secured for a laree number or, indeed, probably for the whole issue; but we deem it better to reserve one half for the coionies. We will only add that notwithstanding the character of our report wa see no occasion fcr dosponrteacy for tho future of the Bank, or doubt that tho shares you hold or those you take up will be good investment, ft should bo borne m miad that euch investigation m a timo of depression so extreme, is one one that woulJ be trying to any instilutioa. The trenchant character of our report may ba taken as evidence that we are of a better mind to f.ice and disclof-e all. The good will of tho Bank's business is of great value. It haa m the past divided among tin shareholders, over and above ten pec cent dividends, sums which aggregate nearly double the amount of capital now lost, and while desiring to guard again.-t the oreatiomof unduly inflated expectation, we can say, from figures of the half year just closed, that the Bank's legitimate business is capable of yieMiog good dividends, despite the serious dra>vbaok under whioh it has of Ute bean working. Given time to enable the Directors to i^ot rid of unproductive assets and develop the Bunk's legitimate operations still better results aro confidently expected. On i!a merita the investment ia one which cocfidentty moy ba expected to yield a Batiafttctory return and command a considerable promlun. The Bank'a business la by bo m ana confiied to New Zetland. In London there are large and valuable deposita, a good connection, and exchange business, from wh'ch virtually no losses are ever ra»de. Ia Acutr.tlia there ia a business of a strictly legitimate character, represented by assets and liabilities aggregating over three miillona sterling, contributing a material proportion of valuable profi s. And da regards New Zealand there la no inherent reason why it should not bo aa proaperoua and wealthy ac any colony of the group, as it is Inferior to none of them In ollmUe, fertility and natural resources. In Its borrowing proclivities whioh have been subject to so moon adverse comment it ia not singular, and bo fur as these have been exoaasive that is but a passing Incident In the national biatory, the temporary oonscquenoea of which have been too sharply brought home to the people of the colony to pjemlt the lesson being soon forgotten." The President moved the following resolution — " Tnat the Directora be authortaod to Increase the oapltal of the Bank by one million, by tho creation of 10,000 further additional shores at £10 eaoh, and that tho Board of Directora be, and are heroby, empowered to Issue, dispose of and allot 5000 shares, or so many of them aa they see fit, on euch terms and conditions, and payable at such time, and either with or without premium, as the Board of Directora may determine." Mr Reader Wood thonght that before putting this reao'utlon the report should be considered. Mr Juatloo GilHea Bald that only the resolution to incceaao tho capital would take effdot at thla meeting. Nothing else done that day would be binding until confirmed at a subsequent meeting, The Chairman's motion was adopted without dissent. The Chairman moved that the words "should not" m the deed of settlement ha deleted, and the word " may " substituted. He explained that at present, under the deed of settlement, any new aharea must be paid for m one instalment. The proposed alteration was to allow them to be paid for by one or more Instalments. Mr W. S. Wilson oeoonded the resolution whioh was agreed to without discus, slon. On the motion of the Rev S. W. Baker, seconded by Mr L; D. Nathan, Messrs G. Buckley, W. H. Oolbeok, and F. Nelson George, being the only candidates for the vaaant seats at the Board of Directors, were daly elected, A vote of thanks was passed to the Committee for their report. Mr Justloe Gillies, Chairman of Committee, acknowledged the vote. It had been suggested that tfala vote woald be taken is an aooeptauo of the report, but ho looked npon it rather as an acknowledgement of the Committee's labors. The principal work had been done by Messrs Baokley and Cjlheok; at the same time others who had lees time to spare had verified the figures This concluded the business, and the Chairman announced that a confirmatory meeting would be held a week heuce. Wellington, October 4 ( The local manager of the Bank of New Zealand states the quorum necessary for the rneetlog Is fifty thousand Bbares not five thousand aain the report this morning, whjoh m,uat he a telegraphio error.