Bank Amalgamation Scheme.

Feilding Star, Volume XVI, Issue 77, 25 September 1894, Page 2

Bank Amalgamation Scheme.

GOVERNMENT Dp NOT APPROVE • v mOFIT. 7 '- " itn FUSS ASSOCIATIOft) Wellington, September 24. In asking leave to lay the bank amalgamation correspondence on the table of the House the Hon Mr Ward said he would like to say .that the communication which had passed from Government to the two banks, had been unanimously arrived at by the Government. ' The "rumors woicH had prevailed as to strained relations between the Premier and himself in connection with this important matter were entirely without'fpundatidn? The correspondence would disclowe the fact that the proposals made tMhe Government J>y the two .banks were, not regarded by the Goyernment as sufficient to warrant them in assenting to some of the proposals. * „,,, - THB I.KTTBRB. JNo. I—Colonial1 — Colonial Treasurer to John Murray and Hon. G. McLean, Wellington. — Colonial 'Treasurer's Office, Wellington, 22nd Sept., 1694. Gen* tlemen, — I have the honor to'acknowledge receipt of your joint letter of the 11th inst., coverinff, proposals for amalgamation between the Bank of New Zealand and tile Colonial Bank. Without in any way committing Government to any fixed course or approval of the proposals, it will be necessary — if any legislation is undertaken by Government — that it shall be of a permissive character, to enable them to be satisfied before assenting to the amalgamation that the general interests of the Colony are concerned and protected. 2.' That in addition to the scrutiny which is proposed in the memorandum of agreement, Government to appoint a special' representative or representatives independent of either bank to examine and report to Government on the various accounts and assets proposed to be dealt with. 3. The shareholders of each bonk to be responsible for and to ; make good all losses on existing business that is not passed by the Colony's valuator*. 4. That upon the expiration of 10 years, the profits of the combined bank shall still continue to be paid to the Estates Company until any deficiency in the winding up of the Estates Company is liquidated, the Government lien upon the interests of shareholders in the Bank of New Zealand to be continuous until all liability to the Colony is at an end. 5. Government to nominate the chairman and two directors of the Estates' Company, and the .shareholders of the Bank of New Zealand to nominate two directors of the same, tie said Board to have fall control over the uncalled capital' of £1,500,000 of the Bank of New Zealand share* holders 6. In addition ' to the appointment of president and auditor to the Bank of New Zealand, Government to appoint one ' director to the combined bank. I should !ike <to have your reply to the foregoing before noon on Monday. Government will then further consider the matter and decide what course they deem itLdesirable to take. — I have, etc., J.,G. Ward, Colonial Treasurer. No. 2 — J. Murray to Colonial Treasurer, Wellington — Bank of New 2ea« land, Wellington, 24th 5ept., ".16*94. ' Sir,— l have the honor to acknowledge the receipt of your letter of 22nd Sept. having reference to the amalgamation of the Bank of New Zealand and the Colonial Bank of New Zealand. ' These conditions, 1 to 4 (inclusive), I should willingly recommend to the bank shareholders, but I regret that I cannot say so of Nos. 5 and 6, nor do I think that even were I -to recommend them the shareholders in the Bank of New Zealand would entertain them. . . . With only four directors on the new board to the Colonial Bank's three, and a director and president (also a* director) nominated by the Government, the Bank of Hew Zealand shareholders would be in a minority, though primarily liable for tbire. sults, and would be at the mercy of persons not of their appointment sad beyond their control. The espl4nation I have given above will serve to make clear the reason why clause 5 also would not be assentbd to. The shareholders being .held responsible to the extent of over £2,ooo,ooo,*cannot, I •übnut, be reasonably expected to part with the control of their pro* perty to a person in whose selection they have no say, • and hind over to him the power to make calls upon them. Clearly as between two directors appointed on each side the chairman would exercise at least as regards the shareholders, supreme power.: I feel sure there will be no objection made to the Government taking an effective part, if they wish, in the management of the Estates Company. I desire to point out that an erroneous impression has been disseminated that legislation is in some way' necessary to free the bank from the Estates Company. I have, etc., John Murray. No 3— Hon McLean to .Colonial Treasurer— Dunedin, 24th Bepfc 1894. Sir, I have the honor to. acknowledge receipt of your letter o/ i 22nd Sept, and have submitted contents to my colleague here. In reply! .. am • desired- to state that the conditions imposed bj you make the scheme such as we could not recommend to the shareholders. Taking the clauses of your letter seriatim—l. We do not object to ike permissive character of the proposed leg. ' ialation. 2. We Have not the slightest objection to your 1 appointing a representative to examine the condition of our accounts and assets, and refer you to our letter of 20th July, whep applying for a share of the Government account in which we specially asked the Government to do this before giving us that share. 3. This stipulation is alright, and was iaUj provided for ia the agreement. So far as scrutiny by the other bank wasconcerned we have, no objection to its application, toVtufe gest'ed further scrutiny 1 4- Ehu^tp, vitally affects the interests of our, shareholders that ijre will not under. any circumstances agree to jpfopoee it to them. 5. This does not immediately concern us. 6. The power pos- "' seised by the Goyernment under die scheme submitted and under clause 2 —namely, president with jpwejr Q f veto, auditor a.nd pjpaliminj^ry "ofujtinj of assets and accounts' to be. made ij Government representatives, on whose report acceptance by Government of the whole scheme will depend— must be held to be sufficient. The attitude which the directors at the general meeting on Wednesday, must take up with regard to the proposed amalgamation, will evidently 6f«P«J%pQn X.. , I,

___________■■■— •^^_!___^---5!---' the answer which we receive tothia. I hare, etc, Geo. McLean. No 4.— Colonial Treasurer to Mr Murray— Wellington, 25th Sept 1894. Sir, Gorernment hare carefully considered your communication of to-day, and in reply I have the honor to inform you that they cannot see their way to depart from the conditions stated in my letter of the 22nd inst. I hare, etc., J. Q. Ward, Colonial Trersurer. A similar letter was sent to the Hon Geo. McLean.