BANK ADVANCES

Dominion, Volume 12, Issue 223, 14 June 1919, Page 10

BANK ADVANCES

FUNCTIONS OF BANKER AND TRADER. The duties and functions of a bank in relation to the trade of the country were discussed by the chairman of the Bank of New Zealand (Mr. H. Beauchamp)' at the 'annual meeting of the shareholders of. tho bank yesterday. "We have been informed," said Mr. Beanchamp, "that there have been complaints that the bank is not affording adequate support to tho trade and industry of the country. _ 1 can only say that there is no justification at all for such complaints. Tim hank is turning away i\n business offered by itcustomers that can by any means be made suitable- for a bank's consideration,

"You will, of course, clearly under, stand that there are" limits to advance business'beyond which it would bo in> judicious for a bank to go. A bank's province is, properly sneaking, to finance Irrido. It should not sink' money in land, buildings, machinery, and such-like. Tho money for those should be provided by the customer's own capital, and thebanker should not be asked lo assist until work and trading commences. . When that point is reached (he time has arrived when the bank can take a'hand, Sometimes, however, we are approached with ii request to find all the money needed to start some liew industry, whilst the promoters themselves propose (o provide nothing, or next' to nothing, in the wav of capital. Applicants must not bo surprised in such cases if their applications are refused, or sanctioned only <»; condition that a reasonable amount ot capital is provided by those primarily interested. . "1 notice in reading a, report of tlio last meeting of'shareholders of Barclay's Bank, Ltd., that the deputy-eliairman, Sir Herbert Hambling, referred to tho same question. He said:'. . . AYe receive many applications from people, who hardly understand the difference between banking capital and capital that is necessary to run their business. They do not quite understand that a bank is qmto willing and anxious tos finance trade, and quite willing to give. t<> their customers temporary accommodation to help them in their trade; bin: it is not the provinceof a bank to employ their money in providing the commercial community with fixed capital. There is a big distinction. ( trader writes that he has an oppoi;tmiity of buying some neighbouring business for so much money, and will we please lend him (he money to do so. If he is successful, he will pay back after a period of many years, but if he is unsuccessful you will lose your money. That is not a security, and (hat is not Okmethod in which a bank should employ its money. In trading, in the export and import of 1 goods, in temporary accom. modal ion to (heir customers, you will find that the big banks which arc m existence at the present time will give every case the most sympathetic consideration: and I think they will help, but not supply thorn—nor should they expect it—with fixed capital for their business. . . .' I "In these, words Sir Herbert lias set out his bank's posilion and ours, and tho position of every other bank doing a legitimate banking business. T echo his views, and. would add that any bank departing lo niiy considerable extent from the rule indicated would be running undue risks and courting disaster."