EXCHANGE ON DIVIDENDS.

Press, Volume LXVII, Issue 20168, 21 February 1931, Page 12

EXCHANGE ON DIVIDENDS.

RESOLUTION OF PROTEST.

! BANK OP NEW SOUTH WALES t SHAREHOLDERS. [THE PRESS Special Service.] WELLINGTON, Febriiary 20. • A resolution strongly protesting -against thO decision of the directors oi! the Bflhk of New South Wales to pay dividends in Australian currency , \vaa carried yesterday At a meeting convened by the Wellington Stock Ex--1 change, and attended by somo fifty shareholders. "The chairman of the Stdck Exchange (Mr E. Bucholz) said that similar meetings of protest wero to be held at Auckland, Okristcihurch, and Dunedin.' Mr G. Shirtciiffc, who was voted to the chair, gaid they were glad to have present Mr B. G. Addison, resident inspector of the Bank of N'ew Solith WaWs. Mr Shirtcliffe said he did not doubt that the directors pf the bank wefe guided by the best legal advice obtainable when making their recent announcement that in future dividends would be payable in Australian currency, but whatever the legal position might be, he felt somewhat strongly that New Zealand shareholders had a real grievance against the directors, and that the Ifttter had tijf theifr announcement impaired the heretofore high reputation of the bank for fair and square dealing. ICeW OapitaL (The bftfik had a total shareholders' list of 8986, of abodt 1600, or rather IeBB than Che-fifth of the total, were domiciled in New Zealand. Thf paid-up capital amounted t0£7,500,000, and the MuterVfl fhiid*£fi;i66,6fld; m&ldhg a total of shareholders' funds of £13,050,000. The &vetage nUihbe* M shares held by individuals over the Whdlil Mmt>er wils 42, but oaring to the reiftiiVSiy l&rge number of very small shttlldlaers 4ft New Zealand ilid average shares htild by each individual in this country was round about thirty. Assuming this figure to be approximately correct, th#t<j ? 48,b0Q, figd. fallypaid shares, r representing £960,000 of paid-up capitali h&ld by Nbw Zealand shareholders. This Now Zealand capital investment carried with it, of COhrse, itft proportion of the reserve fund, sfty>v rougiily, & 785,000, sb that tin. the capital aftd reserve fund together the New Ze&ltlrid shareholders' proportion was £1,745,000, or rather more than one-eighth of the whole. The bank's total deposits at September 30th last were £66,238,000, of which the Me-# 2&&l&nd deposits dtiiountdd to £ 6,315,0d0, or, roughly, one-tenth* The total advances and discounts were £ 60,400,000; New Zealand's proportion was £6,126,000, or, roughly, onetfeiith, so that the Ke-fr Zealand broportl&fis W6rd } rbughly, one-fifth or tha total ftdtolbe* M feh&rdholders, rather ' inoid thfch one-eighth Of thk total capi- > thl fund, find abottt toneichth oi the total buaifaeafr ol .the bfthk. It'MgJitstesOT<J#e-be,'sai3 that ih pro* SoHionto thti whole, the New ZSaland bbtftihed mift &*d bjr reason of the New Zealand capital invests ' 1 'Hui ifcd Ijp td iW *fery te6t»nith(et the Bftfik. of,' J|w ',,&&hth ks itS'New btxsiWbs doit^tilled 111 NoW and tlUi was b&rnfi <jut by the fafe£ that the New Zealand shareholders were on the New Zealand register. It further followed that', as .the profit earned in . : NBw Soaland 3pas really eariied By New Zealand capital, .the dividends ac: cruing from those profits should be paid in New, Zealand Without deduction; It.wha fclso a fair ptetuimftion duifing recent years at any rate, the New Zealand*, percentage -df pirbflt on the volume of business done had been greater >'than that eflfned in Australia, and if that were correct it emphasised his yftfr that & terti&V was being done' to> New Zealand shareholders in forcing them to contribute i to the general £unds> of the bank over, 18 per cSnt". tneii owh | The Exchange Bate,' He understood'that the directors' contention was that the dividends being declared in Sydney must be 'paid in Australian currency.'. 6r, in dtfier wdrds, the ptjiynitmtfe bb tb the present r&td df £lB ISi 6d per cent, discount. Ho suggested thgt exchange,- rate Was a purely; arbitrary onpj based not upon the trade balance between ikk twd fcduntflfei, but ilpfan tB6 financial, needs <Jf; Ailßtt&liS, and imposed for, the sole pnrposb pi preventing ..Australian funds from,; drifting through New Zealand to London, &nd by that nicafis increasing * the' already heavy obligations of the banKs to provide funds in L6ndon f&r And State • Govfeimnents' 'iSommitments. This WdH botild ttut,»y tha fiiet that while-ths 1 banks' Zealand buying rate on , ftaa ndminaliy £ls Ss 6d jidr eent: jtrfeihi\nn, they had liberty to ty6£k doWn id £#<jt{)r dedt. ptemiiiin, whifch clearly dhbwed that the opinion of sftme of the bbSk? at any fatb wa,s that the presettt heavy exchange rdteis Werd.iot justififed by ' the balhnce of tt&de bettosefi the 'two countries. For the Radons thefefofft that we Bank: of New South %aKss 4s regards its New Zealand capital dhd ijuMniiSS was really dbmielled here, ahd that the, exchange rate was a pufely Srbitrafy one flied to safeguard the bank's fuilds in Australia, be contended thit it was" Very difficult for thd direci fiorai effectively to turn doWn tli6 Ne'W ! Zealand ■ shardholders' ■ request that diVi' aends should be paid to New Zealand Without deduction. He had yet td Idattt that B&nk bf New Sduth Wales pound note in New Zealand would Any further than the same note in Australia, and tb ask Ifew Zealand BharpholderS'to accept £Bl 7s 6d, as the Australian shareholders' was to inflict a vera great injustice jipon shareholders in this On-the basis of a 9 per cent,' dividend, >equal t0"£8*6,400 oh the ,New Zealand* capitalj it, would involve,, ft penalty Against in this country of ho less .than £16,0&2 per^ahnum. A ' , He suggested emphatically ihht Newi Zealand shareholders not asking fojc any more jer. unit oi their holdings the Australian shareholder rethe internal value of the £ being practically the same in "both countries. He therefore moved: , ' , "That thi& i&Setihg- of of the Bahk. of Nchtf ScJuth W4les strongly protests against tlie fiction df the ditfectoffc in thfeir proposal to pay future dividends in ' Atistrhiiap ~ rplcy, ; ,theit ffe&sOHs The Bank of NeW South Wales. is, a§'regards its N&v. Zbklafid fiiibital aha. bdSine'BSj teally domiciled in Now < ",2. The promts-l&adfe'tirdta jits' New for the payment df th 6 qiiai-terly ' > dends without any dedtictiofr. "3. The deduction of^the, present arbitrary rate of s&iß 12s 6d b6r cent, would ihfiict upori mnd 4 grav£( involving the'ni collectively in no lesl ,a penalty than per . .based on a 0' per; cent, dividend and . (.the prSfieiit tato of; exdh^bg^." . Ih febhausmn, Hi aUtfgSsted • li the dir ? ctore could t |eV ttieii #4y to

meet tho wishes of tho Nfew Zealand then they should be asked i to Bend thfc toatifailts for ; the full atobtilit of the divides to the Zealand lfeaving thfc lfttter : to make their own arrangements for exehafa&e. " /, . " ,"1 A motion on .these lines was discussed at length' fehd deffi&ted 'almost Uri&ni- I , mribsly, th& - MdtloA caWtod.