Bank Committee's Report.

Manawatu Herald, 31 August 1895, Page 3

Bank Committee's Report.

. ■ ■■ ♦ The report of the Bank Committee is as follows : — y Your committee have had before them the president of the Bank, Mr Watson ; all the directors of the Bank of New Zealand ; the auditor of the Bank, Mr Butt ; Mr Foster, the general manager of the Estates Company ; Mr Lyon, until recently employed as manager of several of the properties of the Estates Company; Mr McKerrow, Land Purebase Inspector; Mr McGowan, Commissioner of Taxes ; and Mr "~"Xuff, accountant of the Estates Company. Your committee have had before

; them balance-sheets of the Bank of New Zealand, the Estates Company ! i and the Auckland Agricultural Company. Your committee find thai; the ■ present directors of the Bank are ■ not responsible for the present nn- , satisfactory Condition of affair 3; There is a deficiency id the flank i of £376,900, and a contingent . dependency of £200,000. There is a deficiency of £4G7,077 i in the Estates Company, against [ which no assets exist, and a further ' deficiency of £444,601 on trading concerns, and properties outside New i Zealand. These altogether amount i to £1,488,578. Of this sum, £148, > 110, though shown as a liability, is | really a debt due by the Agricultural > Company, and represented by assets. ; Deducting this from the aforesaid i sum of £1,488,578, there remains > £1,840,468. This is provided for , as follows : — Capital, bank £900,000 , Estimated amount of call > made 450,000 I _ — — _ I £1,850,000 . leaving a balance of £9582, which • goes to a dependency account. 1 In support of the committee's . opinion, it may be stated that it has ; been found that, apart from any [ indirect injury to the country, the p following interests would be directly i affected by any disaster to the Bank. . On the 81st March, 1895, in New [ Zealand, the other colonies and i London, deposits in the Bank of i New Zealand to the number and amount as follows : — Depositors 41,---i 800, representing j67,141,755.Thi5in- ( eludes Government deposits amounting to £1,145,806. The total number of advances by J the Bank on the 81st March, 1895, , were £7,192,653. , The shareholders in New Zealand number 1050, liable for £403,000. There are 115 branch banks, and 28,584 current accounts. The discount account, representing traders' acceptances, equals £45G,---000. The Colony of New Zealand, independently of the "A " stock, £2,000,000, and remittances in transitu, is creditor to the Bank for £1,403,000, the amount in New Zealand being £-158,000, and in London £945,000. From the evidence taken and the balance-sheets submitted it will be found that the combined Estates Company, Auckland Agricultural Company and Bank of New Zealand are practically one concern. The division is is name only, because the whole of the shares in the Estates Company are owned by the Bank of New Zealand, the only interest .held outside the Bank being the debentureholders who recently acquired five hundred thousand pounds worth of the debentures pieviously held by Baron Schroder, and the debentureholders of the Auckland Agricultural Company, who hold £282,960 worth of debentures. Your committee is of opinion that it would be in the best interests of the Colony, of the shareholders of the Bank of New Zealand, and of all concerned that a separation of the affairs of the Bank of New Zealand and the Estates Company should take place. Your committee recommend that the whole of the freeholds, leaseholds, stations, stock and implements in New Zealand be disposed of, and that the Bank of New Zealand and Estates Company sell them to a Realisation Board, to be established for tbat purpose. That an Assets Realisation Board, consisting of three members, be created as hereinafter provided. That the Assets Realisation Board be authorised to issue bonds for £2,734,000, bearing 8h per cent interest, and that the deficiency, if any, on these bonds, after the realisation of the New Zealand Estates Company's properties, be guaranteed by the Colony to the Bank. In return for these, the Bank of New Zealand, the New Zealand Estates Company, and tbe Auckland Agricultural Company to transfer the whole of the property referred to the Realisation Board for liquidation purposes. That £500,000 of uncalled reserve liability of the Bank of New Zealand shareholders be called up in four equal instalments, the first being payable on 30th June, 1896, the second on the 81st December, 1896, the third on the 30rh June, 1897, and the fourth on the 31st December, 1897. That to encourage the shareholders of the Bank to meet the call of £500,000 proposed to be madt 3 , your committee recommend that the first charge on all annual profits of the Bank beyond £50.000 per annum should be a payment of interest not exceeding 5 per cent on amount paid by* shareholders on the call as aforesaid. That the Bank of New Zealand, out of its profits, pay to the Assets Realisation Board sura of £50,000 per annum as hereinbefore mentioned and any further sum which may remain after paying 5 per cent to ordinary shareholders until any deficit on realisation is provided for. That, to insure the Colony against any loss on account of guaranteeing, security be given over the freeholds, certain leaseholds, stations, stock and implements in New Zealand of tbe value ot £1,879,000, and over

tb« second call of £500,000, and I also dVflf the balance £500,000 of the uncalled reserve liability of the Bank shareholders. That the first call, the last payment of which is due on the 26th November next, estimated to amount to £450,000, together with the present paid-up capital, amounting to £$OO,QQOi be written off to provide for losses, of wbtah £1,150,000 is for ascertained losses, and includes £9582 which is proposed^ to be held as a dependency, and £200,---000 as a contingency for unascertained loss. Your Committee recommend the Colony to subscribe £500,000 for preferential shares, bearing 8£ per cent interest, and tbat they be paid for by issue of 3£ per cent, stock to the Bank ; the Bank to have the right to purchase for purpose of sale any or all of these shares, Bank shareholders to have priority of purchase. This, with the £500,000 of capital from the second call of the reserve liability* will give the Bank of Jtfew Zealand a clear capital of £1,000,000 sterling. In addition to thi3 the position of the Bank will be strengthened by having the whole of the £2,000,000 of " A " stock for use in its ordinary business. Under the altered position that the Bank will occupy, these proposals, if given effect to, will put it on a sound basis. Your Committee recommend that the million be freed and made available for use in the Bank's general business. And to further onable the Bank to increase its earning power, your committee are of opinion that the Bank should be at liberty, if deemed advisable, to secure further trade by purchasing other banking business, but that no pnrehnse be allowed unless with the sanction of tho Gov-n-nor-in-Conncil. And, further, with a view of increasing the earnmg-power of the Bank, the committee recommend that the Colony's business in England be transacted by the Bank of New Zealand. The directors of the Bank are of opinion that, if these recommendations be given elf ct to, the net earning-power of the Bank will be so increased ns to leave a profit of £135,000 per annum. That, in consideration of the £500,000 preferred scares to bo taltenup by the G vernment, the Governor-iu-Conncil be empowered to appoint one director. That the Assets Board shall consist of three members, and the Goveriior-in-"ouncil shall appoiut two members and tho direc tors of the Bank of New Zealand one member. Tlie shareholders of tin Bank should \ c prohibited by law from winding up tho Bank until the whole of the obigations to the Colony are repaid. The proposals of the committee deal only with the landed proper ies, stations, stuck, implements, &c , in Nev Zealand- The trading con cernp, both in and outside New Zealand, and the properties owokl by the Estates Comp-uy utside New Zealaud, are not to lie trans* ferred to the Assets Realisation Board. The directors of the Bank of New Zealand havo informed the committee that the latter properue3 may bo real sed in two years. | Chas. C. Bowen, I Chairman.