BANKING MATTERS.

Gisborne Times, Volume VI, Issue 222, 26 September 1901, Page 1

BANKING MATTERS.

BANK OF AUSTRALIA. .

By Telegraph—Press Association—Copyright Loudon, Sept. 24. The Bank of Australia report shows deposits £13,971,890, cash securities £5,605,607, bills £13,793,426.

THE WELLINGTON CLEARING HOUSE.

The announcement that a central clearing house is to be established in Wellington for the facilitation of exchange between the several banks doing business in the colony will probably arouse enquiryin some quarters concerning the arrangements by which the banks settle accounts one with another. Nearly every business man who has a banking account makes an almost daily practice of paying in to His account cheques drawn upon other banks in all parts of the colony, but the precise method by which tho banks arrive at a daily settlement is not generally known. At the present time, the Union Bank of Australia acts as what is termed the clearing bank for all tho other banks. At the Union Bank’s branches iu Auckland, Wellington, Christchurch, and Dunedin, each of the other associated bunks deposits a considerable amount in gold, more than sufficient to cover an average day’s operations. At the close of each day, a clerk, specially appointed for the purpose at each bank, makes up an account of the transactions

with each of the other banks, and strikes tho balances, which are duly entered in the books of the Union Bank. If, as a result of the day’s business, tho balance of any bank at the Union Bank is shown to bo low, that bank is accordingly notified, and it has to make good its position, either by a further good deposit with the Union Bank or else by making a payment to some other bank whose balance at the Union Bank has become unnecessarily large. Outside the four principal centres the bank make daily settlomouts by giving or

receiving, as tbo ease may be, a draft for the balance upon their branches in the nearest city. The proposed alteration will enable daily settlements to be made by each bank at each of its branches giving or receiving a draft on the central clearing house in Wellington for the day’s differences on the snme principle now in vogue at the smaller centres. The chief objection to the present system lies iu the frequent transference of coin from ono point to anothor, necessitated by tho variations of business, a process always attended by great inconvenience and a certain amount of risk. Tho new arrangement will be modelled on the lines pursued in Sydney, which has been attended with gratifying success, in that it considerably lessens the undue handling of coin. In Sydney, whou tho new system was adopted, each of the associated banks laid down a certain sum of sovereigns, varying from .£20,000 to .£IOO,OOO, according to the extent of its operations, and with this money a central pool was formed. The Sydney pool originally amounted to .£700,000, and has probably been since augmented. The Wellington pool is likely to total at least £500,000. In Sydney the pool, which is kept in trebly locked safes, is held by three trustees, who are the guardians of the keys, and the money is never dis- ■ turbed, except for the purpose of being ' periodically counted. At the close of each ■ day’s business, each bank doing business in New South Wales forwards to the secretary of the pool in Sydney a statement showing the amount it has to pay or receive from each other bank on the day’s 1 transactions. These differences must balance each other. If one bank’s 5 balance goes down another goes up, and , the aggregate of the pool remains unaltered. If it happens that the balance of any bank in the books of the pool is below its quota, that bank must bring it i up to the normal figure by paying coin to a bank whose balance is higher than its quota. Although full details concerning the working of the Wellington clearing house to bo opened on tho Ist of October are not yet available, the system will be - the same as that in Sydney, with certain modifications, rendered necessary by the , change in locale. 1