BANK OF NEW ZEALAND

Evening Post, Volume CXII, Issue 58, 6 September 1926, Page 10

BANK OF NEW ZEALAND

LONG TERM MORTGAGES

INCREAS£ IN CAPITAL

PROVISIONS OF NEW BILL.

The Bank of New Zealand Bill introduced into the House of Representatives on Saturday authorises the directors of the bank to increase the capital of the bank by £1,406,250 in £1 ordinary shares. The new shares are to be classified as long-term mortgage shares and are to be divided into two classes, G longterm mortgage shares, and D long-term mortgage shares. These shares are to be created in the proportion of one C share to two D shares, and-the two classes are to be allotted in the like proportions as near as can be. The Government will have the prior right of subscribing for C shares. The holders of ordinary shares shall have the prior right of subscribing for D shares in proportion as near as may bo to their, holdings. Shares of either of these classes not subscribed for in terms of prior Tights may be allotted by the directors as they think fit at not less than par. The holders of longterm mortgage shares shall be entitled to a fixed preferential but non-cumula-tive dividend at the rate of 6 per cent, per annum in the case of C shares, and 7i per cent, in the case of D shares, the -dividend to be payable half-yearly. As between the C shares and the D shares the former shall be preferred to the latter both as to capital and dividend. Both the 0 and D shares shall rank for dividend and in a winding-up after the preference A shares, but in priority to the preference B and ordinary shares. DISTRIBUTION OF PROFITS. The clause as to the distribution of profits is as follows:—• (a) The first fifty thousand pounds shall be paid to His Majesty the King or other the holder as a fixed preferential but non-cumulative dividend upon the preference A shares. (b) Any balance after providing for the dividend upon the preference ■• A shares shall be applied, firstly, in pay"rnent to the holders of the said C shares of the fixed preferential noncumulative dividend of .6 per centum per annum as hereinbefore provided, and, secondly, in payment to the holders of the said D shares of the fixed preferential non-cumulative dividend of 7i per centum per annum as hereinbefore provided. (c) The residue of such annual profits up to the sum of three hundred and six thousand two hundred and fifty pounds shall be paid to the holders of the preference B shares and ordinary shares in the proportion of one-seventh part thereof to His Majesty the King or other the holders of the preference B shares and six-sevenths part thereof to and amongst the holders of ordinary shares, and if such residue exceeds the said sum of three hundred and six thousand two hundred and fifty pounds the excess shall be distributed to His Majesty the King or other the holder of the preference B shares and to the holders of the ordinary shares in the proportion of one-third to His Majesty the King or other the holder of the preference B shares and two-thirds to and amongst the holders of ordinary shares. In the month of December in each year the directors may pay1 on the respective classes of shares in the bank's i capital such interim dividend on account of the next forthcoming dividend as in thoir judgment the position of the bank justifies. Long-term mortgage shareholders are to have no voting rights, neither will they be allowed to requisition for special general meetings. Provision is made for postal ballots of holders of ordinary shares on proposals to increase or cancel capital. The directors are empowered to borrow money on behalf of the bank by the issue of debentures or debenture stock having a currency of 37J years. The amount of debentures and debenture stock outstanding at any time shall not be greater than three times the amount of the capital paid up upon the shares created under the Bill, and trustees may invest in such deben- | tures or stock. j Moneys constituting the long-term mortgage fund may be advanced on first mortgage of freehold or lease- | hold lands, the term of the mortgages Ito be 37 years. The amount of ad- \ vances is not to exceed two-thirds of I the value of the security in the case of freeholds, or one-half of the value of the lessee's interest in. the case of leaseholds. The rate of interest on these j advances is not to exceed 6 per cent. per annum. Temporary transfers from the ordinary funds may be made to the special loan fund, the aggregate amount not to exceed £500,000 at any one time. Any portion of the long-term mortgage fund not immediately required for loans on mortgage may be transferred to the ordinary funds of the bank at the rate of interest allowed for fixed deposits. REMUNERATION OF DIRECTORATE. The remuneration of the directorate of the bank is increased from £5000 to £6500. A further clause abolishes the December half-yearly meetings of the proprietors, and tho procedure for the election of directors is also modified. The provisions of the deed of settlement imposing a maximum in respect of the number of shares in the capital of tho bank which may be held by one proprietor shall not apply to long-term mortgage shares. -The bank is also authorised to provide residences for its officers. When the Bill was introduced, the Right Hon. Sir Joseph Ward (Invorcargill) asked the Minister of Finance if, independently of that measure, a clause was being introduced to ensure that all the banks in the Dominion should have the same terms and conditions for long-dated loans as ' tho Bank of New Zealand was to have. He also asked in what Bill that clause might be found. . The Minister of Finance (the Hon. W. Downie Stewart) said it had been Btated that similar facilities would be granted to any other lending institution which was willing to give longterm mortgage loans. It had been stated that those facilities would be given if other banks desired thcni. If a general clause were inserted in anticipation of any proposals that might be put forward, tho proposals might be so dissimilar in natur* as compared with the terms and conditions in respect to the Bank of New Zealand that it might not give the required assistance. The facilities to be given would depend upon the position of each bank, and if it were merely stated that a concession would be made on certain lines the position might not be met at all. Applications would havo to be considered carefully as they were received. Sir Joseph Ward said it was understood in the Public Accounts Committee that similar provision was to bo mado for all the banks. It was upon that understanding that he had agreed to the Committee's recommendation. He stressed the wide importance of the matter, and asked if the other financial institutions with millions of .monejr on loan, in the Dominion iihoaldj

be excluded from an arrangement intended for the relief of people who could not repay their loans for some time.

SPECIAL TAXATION.

Mr. Stewart said that tho concessions to the other banks might take tho form of special taxation. Each case would have to be scrutinised very carefully. The Government was not making a taxation concession to the Bank of New Zealand. It was putting in its own money at 6 per cent.