Amalgmation of Banks.

Opunake Times, Volume I, Issue 26, 28 September 1894, Page 3

Amalgmation of Banks.

Wellington, September 24. ! Tbe following t *rrespo»dmce ro* litive to the amalgamation of the

banks was Li.l on the table of the House tc-night by the Colonial Treasurer :

[No i.] Colonial Treasurer to John Murray j ani> wz e Mon Geo McLean, j Wellington. Colonial Treasurer’s Office, Wellington, 22nd Sept., 1894. • Gentlemen,— l have the honour to acknowledge the receipt of your joint fitter oluita inst, covering proposals f*>r the amalgamation between the Bank of New Zealand and Colonial

Bank. In reply I have to state that the matter Gbas received careful con- ' from Jibe Government. Without in any way committing the Government to any fixed course or approval of the proposal, it will be ne<^ssary: (1) if any legislation is unr 4er taken by the Government that it shall be of n permissive character to enaUte the Government to be satisfied before assenting to the aualg&ma--1 tion that the general .interests of the '■ flfitony are conserved and protected. (2) That in addition lo the scrutiny. Which is proposed ia the memorau410} of agreement, tbe Government to appoint a special representative or representatives independent of either Bank to examine and report to tbe Government on the various accounts and Karls proposed to be dealt with, i (8) Thansharebolders of each bank to be responsible for and to make good sH losses on existing business that is not passed by the colony’s valuers. (|) .That upon the expiration of ten yeare the profits of tbe combined hanks shall continue to be paid to tbe Estates Company until any deficit in the winding up of tie Assets Company is .liquidated, the Government lieatipon the interests, of shareholders in the Bank of New Zealand tc be continuous until all liability to the colony is nt an end. (5) The Government to nominate a chair an and two directors of the Estates Company, and sharehdlders of the Bank of New Zetland to nominate two directors to tip same, the said board to have full CO] trol uyer the uncalled capital of ill 500,000 c-f tbe Bank of New Zealai d shareholders. (6) In addition to th appointment of president and audij the Bank of Now Zealand, tin - Government tc appoint on* dire) br to th: combined bank. I sh old like to have your reply to the forgoing before noon oh Monday. Wi' Government will then further eoHider ths matter, and decide wbat eovrge they deem it desirable to take, &c., :1% ; J. G Ward, Col. Treasurer. | J. Murray to G •lonial Treasurer, , | Wellington. „. a Bank of New Zealand, | Wellington, 24th Sept., 1894. Sib, —I have the bon„r to acknowledge the receipt of your letter of 22nd * Sew mLcr/'having reference to the iifcSlgar atio: of the Bank of New -Zetland, and sotting forth certain supplementary con ations as necessarily precedent to any .action therein by the Government. These conditions, one to fool|incluaive, I should willingly recommend to the bank shareholders, bum greatly regret -that I cannot say bo n numbers five and six, nor do I think that even were I to recommend than the shareholder* in the Bank of ;N«H Zealand would entertain them. It till probably make the position moi| clear if I begin with clause 6, which is that, “ In addition to the appowment of president and auditor to theJßank of Net: Zealand, the Government tc appoint one director to th*||ombmed bank.” In considering thiafetipulatuw I would ask the Govenfaent to bear in mind that tbe Ba|| of New Zealand shareholders for the future of the * bhoC net mly to the extent of their paid 'jp capital, future profits limit of time, and tbe reserve lianpty of £1,500,000, because under therilerms of the provisional agreement four per xent is to be deducted t> tie on account of Surge item, “ share account,” and in consideration, therefore, the surplus profile, after a dividend of six per cent and |20,000 to the reserve, are to be MtoSlied to the Estates Company. should there be ineffective maßgement the consequences would appp n in the amount of tbe surplus to tiilpaid over to the Estates Companyf for the outcome of which the fere liable in the great Amniffl have named ; while with only ; : oh the new Board to the Bank—three and a director y; ondl)resident. (also director), nomi- [ the'Government—the Bank of Zealand shareholders would be . in : Though pifmarily the results they would be at the n&rcy of persons not of their aopoihfeent an Ayond their control. is-fl” tuj essence f the arran :e----t e .are Guaranthat shtueL ki-.rs should have ’• diiWMbra of their wa ap ptroent to \ mauMO the bank, t'.o Government the audit and p.wer of vetlpp objecionable business. To takelbe ordinary management ut of the cu otroj of the shareholders, whilp h.lr -ug them eopousibie for would, I fed sure, i.e re- . gatWKy rbem as inadequate* The I have given above will fserv#tf> '.ake clear the reasons why ol*uk|> also would not be assented to, being held respon- ( Bib&M, tb® extent of over £2,000,000 I c»«»| I submit, be reasonably expect part with the conircl of their proifc to a person in whose selecI fioitWpY : bavP no say, and hand over I to power to rnnko calls upon I; thecSGlearly as between two tlirecj| on each side the ebairyKild exercise, at least as regards supreme power. -At - .**}* _

the same time, I feel sure there will he no objection made to the Government taking an effective part v if they wish, in the management of the Estates Company. In conclusion, I desire lo point out that an erroneous apprehension has been disseminated—that legislation is in some way necessary to free the bank from tbe Estates Company. Except as a condition of amalgamation made by the Colonial Bank, there is no necessity. It is already a separate company, and separately administered, though to a large extent under the bank’s control. As to its being a burden on the bank, it is only so in tbe sense of being a burden on the bank shareholders, which’ it must of necessity remain till it be liquidated, unless the colony were to release them, which nobody proposes. —I have, Ac , John Murray. [No. 3.] Hon- I’r McLean to the Colonial Treasurer.. Dunedin, 24th Sej t., 1894. Sir, —I have the honor to acknowledge the receipt of your, letter of the r 22ud September, and have submitted' I the contents to niy colleagues here, i In reply, 1 am desired to state that the j conditions imposed by you make the scheme such as wo could not recommend to our shareholders. Taking the clauses of your letter seriatim ; (1) We do not object to the permissive character of the proposed legislation. (2) We have not the slightest objection to your appointing representatives | to examine the condition of our ac- j counts and assets, and refer you to our • letter of the 20th July. When applying for f, slarc of the Government account we specially esked the Government to do this before giving us shares. (3) Tbe stipulation is all right, and was fully provided f t ’n agreements j so far as secuiity of other banks was i concerned. We nave objections to i the suggested fur‘bc; scrutiny. (4) ’ This so vitally abbots the interests of our shareholders that we will not under any circumstances agree to propose it to them. It woulg be an invitation to spread the realisation of tbe Assets Company over an indefinite period, and would make'onr shareholders’ dividends responsible beyond what can fairly be asked or was ever intended. Tins bank will have no voice in the management cr realisation of the Assets ompany, and regarding the Government lien on the interests of the present shareholders in the Bank of New Zealand we can raise n 6 objection. (5) This does not immediately concern us. (6) The powers possessed by the Government under the scheme submitted, and under clause 2 above—namely, president with power of veto, auditor and preliminary scrutiny of assets and accounts to be made by the Government's representative, upon whose repor'. acceptance by the Government of the whole scheme will depend, must be hold to be sufficient. It is obvious that tbe presence of a nominee of the Government on the Board would detrimentally affect tbe business of the banks. (Finai clause) The assent to the amalgamation on the part of the ' ofi.nial Bank would grcally depend upc the shareholders being represented in the amalgamated institution by men whom they had confidence in, Without this guarantee there would he little prospect of jbtaining the necessary consent. The attitude which th? directors at the general meeting on Wednesday must take up with regard to the proposed amalgamation evidently so largely depend upon the answer we receive to this, that I must ask you to reply as definitely as possible on the whole affair not later than noon to-morrow.—l have, Ac.,

George McLean.

[No. 4.] The Colonial Treasurer to John Murray, Wellington. Wellington, 24th Sept., 1894. S-R, —The Government have 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 named in my letter of the 22nd inst.—l have, &c., J. G. Ward, Colonial Treasurer. [No. 5.] The Colonial Treasurer to Mr McLean, Dunedin. Sir, —The Government hive ca fully 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 named in my letter of the 22nd inst.—l have, &c.. J. G. Ward, Colonial Treasurer.