THE BANK OF NEW ZEALAND.

Te Aroha News, Volume VII, Issue 441, 29 January 1890, Page 6

THE BANK OF NEW ZEALAND.

RECEPTION OF THE NEWS IN LONDON. (From Our Special Correspondent.) London, December 13. You will have heard by cable of the semipanic concerning the Bank of New Zealand, caused by the arrival of the newspaper reports of the meeting at Auckland on October 25th. No doubt, the suddene&s and unexpectedness of the news had something to do with the scare. If the dritt of Mr Buckley’s charges had been cabled in connection with the announcement of the dividend, the public would have beeu prepared to read them later in extenso and they would have lost half their force. As things unfortunately were, the shares dropped £2 at a blow. The

“ Financial Times ” did not improve matters by selecting this crisis to fire off a tremendous attack on the Bank’s policy, and finally the great “Thunderer ’ of Printing House Square itseif re-published in its money articie the ex-Piesident’s allegations. True, it offered no comment on them and appended a “par.” to the ettect that the London Board would to - day issue a circular to shareholders explaining the whole situation ; but still the etlect was injurious to the Bank. Mr Stewart told me yesterday that he thought they had turned the corner, as deposits were coming in again. Last night’s “ Pall Mall Gazette ” contains the comprehensive explanations I append, and will, no doubt, do much to allay gossip and alarm : “ The London Board of the Bank of New Zealand have au'angtd to send to the shareholders a report ol the proceedings at the recent half-yearly meeting in Auckland at which the ex-President, Mr Buckle.v, attacked the administration and the position of the Bank with respect to the valuation of its assets. The conduct of Mr Buckley, they say, has been condemned not only by the en ire press of the colony, but by loadmgcolonists unconnected with the Bank. As tohischargesagainstthe staff, the Colonial Board, a majority of whom are new directors, have expressly exoner ated them. Mr W. H. Colbeck, the new President, addressed a letter to the London Board on September 9, on theretiiement of Mr Buckley and his brother-in-law, Mr McLean. h copy of this letter will also be placed in the hands of the shareholders. The president refers to the tacts of their retirement and their disposal of their shares, and then deals with the charge that the asse>s have been over valued. It should

be explained that the 4 in globo” account embraces the various properties which weresetaside by special parliamentary enactment when the difficulties arose in consequence of the general shrinkage of values. It was fully expected that in realizing them deficiencies would occur in some instances, but these would be set off by surpluses in other cases. There has been some talk of transferring these assets to a trust company, which could nurse and realize them advantageously, and this course may yet be adopted. However, with respect bo the present position, Mr Colbeck writes : “ Some time after the issue of the report of the Shareholders’ Committee, it became apparent that some assets were not realising the values set upon them, and Mr Buckley now asserts there is a deficiency on tne “ in globo ” account, and seeks to shirk responsibility by asserting there was | negligence and default on the part of those who furnished the valuations. The Committee’s report has, however, in no way been challenged, and while there are ascertained deficiencies, Mr Buckley ignores the fact that there have been also surpluses : that the circumstances ol the colony itseif have materially changed since the early part of the year : that the bank’s earning power is increasing; that the return from the “in globo ” assets is improving and will still further improve; that the best part of the assets still remain to be disposed of, and the probability is, will in course of time realize prices which will more than cov< r what deficit there may so far Dave been. The Board express this view after having given the most careful considerati n to the question in consultation with the writer, who, together with Mr Buckley, formed tbe working part of the shareholders committee. “ Mr Buckley has further stated that the losses the Bank will sustain on the account of Lightband, Allan, and Co., who have recently been declared insolvent, will preclude the Bank from paying a dividend this half-year. The Board are. however, satisfied that in the amount brought forward from last hall-year, theie is more than enough in hand to cover whatever loss it is possible to sustain on this account or on any other account among the Bank’s current business. No doubt the half - year now drawing bo a close has been a trying one from a profit earning point of view. At the commencement ol it we were accumulating funds in London io meet expected withdrawals of deposits, the drain of which had been more severe and long continued than we had anticipated. “ These withdrawals to a great extent ceased, so that for some months our funds neither helped to swell profits nor to diminish interest charges. Nevertheless the Board are confident that the result of the half-year’s working, when ascertained, will furnish a refutation to Mr Buckley's assertions.

“The recovery of the Bank from the shock of writing off capital has nob been so rapid as was at first hoped, and it has become evident that the restoration of the Bank to its former commanding position will be a work demanding time and patience. “ Nevertheless the Board take this opportunity of expressing to the London Board their unanimous dissent from the views expressed by Mr Buckley, and their firm conviction of the improving position of the Bank, and of the prosperous future which they are assured is before it.” “ Parliamentary powers have been obtained for removing the chief direction and control from Auckland to London, should the shareholders deem it expedient, and the present chief board in the colony have recommended that the alteration be carried out as speedily as may be. For this purpose proxies are asked by the London Board in view of the special general meeting shortly to be held at Auckland.” This morning’s “ Times ” contains the following The following is the-circular addressed by the Bank of New Zealand to the shareholders, to which we referred in yesterday’s article:— Bank of New Zealand, London, December 12th, 1889. . To the shareholders of the Baiok of New Zealand. Dear Sirs, —It has for some time been under consideration of the directors of the Bank whether it might. not be to its advantage were the chief direction and control removed to London, and the necessary, powers were sought and obtained from the New Zealand Legislature to make this change should shareholders deem it expedient. Several circumstances ha*’© finally

determined the present chief Board in the colony to recommend to shareholders that the alteration in question be carried out as speedily as may be ; and on behalf of the London Board I have to request that you will intrust them with your proxy for the necessary special general meeting of the shareholders shortly to be held at Auckland to consider and decide the question, and that you will signify whether you desire your votes to be used for or against the change. A form of proxy in duplicate, with a letter authorising the blank in the proxy to be filled tin at Auckland with the name of any duly qualified shareholders or shareholder, is enclosed herewith, and I shall be obliged by your completing and returningthemtomeasearly as possible. The proxy, you will see, requires to be signed in the presence of a witness. In anticipation of shareholders’ sanction to the removal of control to London, the London Board have decided to appoint a gentleman in their confidence to proceed to the colonies to examine into the affairs of the Bank, so that they may be in a position to act effectively in the interests of shareholders with the least possible delay. A report of the proceedings at the recent half-yearly meeting in Auckland is S3nt to you here with. In regard to this I may say that the conduct of Mr Buckley has been condemned not only by the entire press of the colony, but by leaning colonists unconnected with the Bank, and under ordinary circumstances not its supporters. His ci arges against the Bank staff are universally discredited. The staff have been expressly exonerated from them after a careful examination into the facts by the Colonial Board, a majority of whom are new directors, entirely unconnected with, and in no way responsible for, the losses and complications of the past. I am directed to send you extracts from the New Zealand press showing its views as to Mr BucUley’3 action, and also copy of a letter from the President of the Bank in Auckland to the London Board, dated September 9bh, 1889, on the occasion of the retirement of Messrs Buckley and - cLean. The London Board is of opinion that the views expressed in this letter are entitled to the fullest weight and confidence. 1 am yours faithfully, T. M. Stewart, Manager.

Together with the above circular, a letter from Mr Colbeck, the President of the Bunk of New Zealand, dated September 9, addressed to the London Board of Directors, is issued this evening. As this communication consists largely of personalities, we pass over the first portion and give the following extracts. (The “Times” then quotes from the letter, which is already given in the extracts quoted above from the “ Pall Mall Gazette.”) It proceeds: “ Whatever the merits of the dispute between th 6 Board and Mr Buckley may be, it should be remembered that the ex-prtsidenr, Mr Buckley, has to be heard. Pending the publication in detail of his reasons for resigning, the New Zealand journals inform ns that he stated at the meeting held at Auckland on October 25th last, that he held the proof in his hands that the shareholders’ committee had been deceived by the information furnished to them from the bank as to its position, and that he resigned rather than be a party, as he alleged, to concealing the real state of ihe bank’s affairs. We are justified in assuming that Mr Buckley had not delayed publishing the evidence he has to otter of the truth of the serious charges he makes against his former colleagues, and ic will shortly be laid before us. . “ We are requested to publish the following letter with reference to the remarks we made in yesterday’s article on the affairs of the Bank of N6w Zealand :

1. Queen Victoria-street, E.C., Dec., 12. “Sir, —1 observe in your issue of to-day, referring to the report of the half-yeariy meeting of the Bank of New Zealand at Auckland, you remark that “it will be remembered that some time since this institution got into difficulties which led to the removal of one of its managers here and the loss of the whole of its reserve fund. “ As this statement may operate to my prejudice I beg to state that I resigned my position, after twenty-six years’ service as managing director in London, and that the whole of the losses of the bank in London during that time did not amount to £I,OOO. as against profits of nearly £1,000,000 sterlintr. “As admit'ed by the board of the bank in Auckland, the London management has been successful and irreproachable, the losses having occurred in connexion with the colonial management, for which the London board or management were in no way responsible. Notwithstanding the extraordinary action of Mr Buckley, the late chairman, 1 believe the transfer of the head office to London wi 1 insure the future good management of the institution and restore to it its past earning power and financial success. I am, Sir, yours faithfully, F. Lark worthy.”