BANKS’ WARNING

Hokitika Guardian, 18 February 1933, Page 2

BANKS’ WARNING

TRANSFER OF CAPITAL TO N-Z

(EFFECT ON STOCK EXCHANGE

AUCKLAND, February 16.

Actioif being taken by the New Zealand banks to restrict th e transfer of funds from London to the Dominion, according to unofficial intimation given to Auckland stockbrokers during the week. It .is stated that th e banks have declined to negotiate brokers’ drafts, just ag similar action was taken recently to check capital movements from Australia to New Zealand.

From inquiries made at Auckland banks yesterday it was learned that a cautious policy was observed in buying London exchange. It wa s pointed out that every case wag treated on its merits, although the retirements of the exporter were facilitated. One official said that the banks would not accommodate any transaction which savoured of profit-taking and the speculator received no consideration. The banks sought all particulars of cases involving the transfer of capital. Some degree of restriction was necessary, especially at the present time, when the export season was at its height, in order to prevent heavy accumulation of London funds. “The banks are no doubt entitled to limit gambling on exchange, but to check all transfers of capital hinders 'legitimate movements and lessens the scope of business oiv the stock market,” said a leading broker, “Such shares as Wa i - hi, Blackwater, Loan and Mercantile and New Zealand and River Plate have sale in London, and business can usually be done by the New Zealand seller. 'The banks now refuse to negotiate this business. It means simply that share values will be governed by the domestic demand as both Australian and London buying orders cannot be covered.” Two instances illustrative of the policy adopted by the banks were quoted. In one case a retired Indian Government official living in New Zealand wished to transfer a. £looo' held in English securities. It was some days before he could convince the bank that he wished to buy property in New Zealand and that the transactions was not speculative. The business was negotiated. No satisfaction could he obtained by another man who wished to bring to New Zealand about £3OOO held j.n one of the English banks. It was stated that the London branch of the New Zealand bank refused to 1 facilitate the transfer when approached by the English bank.

The view was expressed that the banks were acting in unison in the (matter. Representations have been made to the Associated Banks, but no reply has so far been received.