“D” Mortgage Bank Shares

Dominion, Volume 28, Issue 106, 29 January 1935, Page 11

“D” Mortgage Bank Shares

Sir, —“D” mortgage debenture-holders wilt- read with dismay the report from Auckland on this matter. If the bank has power to recall these debentures and repay the holders at par, then recent buyers will lose nearly half their capital. I suggest that this constitutes a gross injustice to “D” mortgage-holders, and I hope for the sake of the directors as well as the mortgage-holders that the report has no foundation in fact. Indeed, the report may prove to be merely an attempt on the part of some persons to rig the market and depreciate these securities with Qie object of buying them at a low price. The Dominion Special Service report suggests that any action the directors may take would be due mainly to the Government proposals regarding the National Mortgage Corporation. This looks as if the bank is trying to lay the blame for its proposed action at the door of the Government, and the idea comes into one’s mind that the bank does not approve of the proposals of the Government. Whatever the reason may be, I maintain that it would be a gross injustice to the “D” mortgage-holders who have bought these securities at any price up to 35/- to be repaid at short notice at £1 per share. Would it not be tantamount to depriving them of 15/- per share? Would such a transaction be in the interests of the directors or the ordinary shareholders, or of the investing pubHc generally? Does the Act allow the directors to repay the mortgage shareholders £1 per share at a moment’s notice? If it does, then I think that this fact has never been mentioned in any recent bank reports, and it should have been mentioned in every bank report every year. Further, 1 would ask the stockbrokers of New Zealand whether they have always warned clients who have purchased “D” mortgage shares through them that these securities might at any time be redeemed at £1 each. If all stockbrokers have acted as tlie two did from whom I bought I hose shares, then I can say definitely (hat they did not advise their clients of the serious disability the prospective buyers of these shares were under. My brokers did not say a word to me on the point—and, further, the whole transactions were on the basis of a perpetual investment. If it is true that the directors contemplate putting such proposals as have been suggested before the ordinary shareholders, then it seems to me that it is up to tlie Government to step in again in the interests of the small investors who have saved a tew hundred pounds and invested them in these securities. I would suggest that some large holders of these.debentures hold a meeting in Wellington, at the earliest date possible, to gi\X immediate consideration to the question as to what is the best to be done in this matter.—l am, etc., “D" MORTGAGE. Wellington. January 25. [From inquiries made at the Bank of New Zealand yesterday it was learned that there was no foundation for the report from Auckland suggesting that the bunk's long-term mortgage capital might | be repaid shortly.]