BANK OF NEW ZEALAND.

New Zealand Times, Volume XXX, Issue 4402, 29 April 1875, Page 2

BANK OF NEW ZEALAND.

(From the Auckland Weekly Herald.) In a recent issue of the Sydney Morning Herald, the writer of the commercial article remarked:—“The ‘retributive’ policy of the Bank of New Zealand has already produced a different result to what was anticipated by the directors of that institution. They caused some sensation in Australia by offering 6 per cent, for deposits. They have been met by a still bolder move on the part of the Bank of Australasia in giving 7 per cent, for money in. New Zealand. This conflict between the monetary institutions may at any moment produce most serious results ; it is literally playing with fire. The deposit business of colonial banks is of so gigantic a character that it cannot be trifled with at the caprice of any single board of directors ; and it is probable that nothing will tend sooner to end the present contest than the determined position taken by a bank with such resources as the Australasia.” It will, no doubt, be satisfactory to the Bank of New Zealand to find they have friends in Sydney who will not altogetherallow them to be jumped upon. A writer in a subsequent issue of the same paper, under the signature of “ Money,” publishes the following letter ; —“Sir, —ln your money article of Friday last, you touch on the so-called ‘retributive’ policy of the Bank of New Zealand in a manner which I fancy exhibits some ignorance of how this policy was brought about, inasmuch as you virtually extol the Bank of Australasia for having gone a step further in the very direction which you condemn, when in a lesser degree followed by the Bank of New Zealand. Perhaps you are not aware that it was not the Bank of New Zealand which first raised the rates of interest on deposit in New Zealand, that it merely followed suit to other banks, but in Melbourne also as well as in New Zealand, and that it is this latter course which seems to have given so great offence, that now in its turn adopting the ‘ retributive ’ policy, the Bank of Australasia goes the further step of offering 7 per cent, for money in New Zealand. To use your own argument, ‘A conflict between banks may at any moment produce serious results, and the deposit business of a bank should not be trifled with by any single Board of Directors.’ May I ask what you call ‘the determined position taken by a strong bank with such resources as the Australasia,’ to which you refer, and which you expect to be so effective ? What, in your estimation, does ending the contest in this fashion mean 2 If it implies aught else than a settlement between banks as to what rates of interest on deposit they will give, and which might have been determined by- managerial consultation without contest, it must mean the intended and resulting detriment of a rival institution, and is not this just that trifling with the deposit business which you condemn as ‘playing with tire.’ I am quite aware it has been said of the Bank of New Zealand why do they come here 2 Let them fight their battles on their own ground. This question I heard put by a banker, who quite forgot that his own bank and several others were established in New Zealand, and, so tospeak, therefore foreign to that, country, and that his argument would cut both ways. But what do you think was the ■ result anticipated by the directors of the Bank of New Zealand when- they offered 6 per cent, for money in common withxjther banks, and which in your opinion is realised ? Was it, think you, othendhan simply this ? As other banks have offerotterir customers 6 per cent., we give it too ; we intend to keep our customers, and, by way of reprisal or retribution(as the word has been used), we will-just offer the same rate to those other banks’ customers here and on the other side of the water also. The result anticipated will certainly be so far realised; the Bank of New Zealand will keep its customers in New Zealand, and oblige the Australasian to give its customers here and in Melbourne the high rate it offers in New Zealand, even if no loss of constituents be involved. It does not matter what the rates are, this will be the first result; concurrent with it must be loss of profit for all the banks and sh?rt dividends for shareholders, while a further possible result may even be of that serious character which you deem possible at any moment. Your article is, however, somewhat enigmatical as to where all that is blameworthy or unsound in policy in this most important matter lies, though by deduction I confess it seems to me to point in the wrong direction.”