BANK SHARES

Dominion, Volume 28, Issue 103, 25 January 1935, Page 6

BANK SHARES

Effect of Recent Act Dominion Special Service. Auckland, January 24. An interesting feature of the investment market at present is -the weak inquiry for Bank of New Zealand D mortgage shares, coincident with a strong demand for ordinary shares, prdiuary fl shares are now selling on the Auckland Stock Exchange at <5O/6, a rise of 1/6 since the beginning of th<year. D mortgage fl shares are nor wanted at 30/6, the market price at the Qiirt of last year being about 32/-. They were sold up to 35/6 in Hie middle of last year. Toward Hie eml uf 1931 observers of the market questioned whether an ordinary dividend of 10 per eent. could be maintained under the existing conditions, but a new possibility is now being discussed, which lias had the effect of strengthening the inquiry for ordinaries. This is whether the bank’s long term mortgage capital might not be repaid, especially in view of the Government’s mortgage finance proposals. In 1926 the bank issued £703,125 in long-term mortgage shares pursuant to legislation authorising the establishment of a long-term mortgage department. The issue was fully subscribed and paid, one-third, £234.375, being in long-term mortgage shares held by the Government and bearing 6 per cent., and £468,750 being in I) long-term mortgage shares bearing 7} per cent., end held by the public. In 1929 and 1930 issues of mortgage debentures stock were made, the rates of interest being 5 per cent., and 54 per cent., and the redemption dates in 1939 and 1940. As at March 31, 1934, the long-term mortgage fund consisted of £703,125 capital and £607,050 debentures, a total of £1,310.175. Loans amounted to £1,106.096. and transfers to the ordinary department £204,079. The Bank of New Zealand Act. 1926, provides tor the cancellation and redemption of the shares conditional on a resolution being passed at an ordinary or special meeting, and subsequent confirmation by a postal ballot giving a two-thirds majority. As the holders of D mortgage shares have no voting rights either in meeting or by postal ballot it appears that the fate of the whole issue rests with the ordinary shareholders. Another condition of cancellation is that it shall not take effect until all debentures are redeemed unless funds | sufficient for their redemption have i been deposited with the Public Trustee.