BANK OF NEW ZEALAND.

Temuka Leader, Issue 1799, 6 October 1888, Page 3

BANK OF NEW ZEALAND.

At b special meeting of the above Bank’s shareholders (»l which 5000 shares were represented), held in Auckland last Wednesday, the report of the spec al committee appointed to investigate the affairs of the institution was read by the Chairman, Judge Gillies. It was to t ho effect that the position was eminently unsatisfactory, as upon a rigorous examination it was discovered that the losses of the bank would absorb the whole of the reserve fund and one-third of the paid-up capital—in all, about £BOO,OOO. The report goes on to say ; “ The principal Australian losses have been made in Sydney and Adelaide, wheie the selection of managers was in each case, to say the least, unfortunate. In Sydney, after a gambling career long known to most people, the manager was convicted of embezzling the batik’s funds, and in Adelaide money appears to have been advanced, or rather squandered, in a way which can only be charactered as reckless and disastrous. “ North Island (New Zealand). “In Auckland we regret to find that, though the bead office of the hank te there, and its affairs under the immediate aye of the directors, the general diameter of much of the business carried on has been most objectionable, and the policy pursued open to grave oensme. Inflated schemes or proposals coming from, or influenced by, certain persons appear to have met with ready support by lavish advances to companies and individuate without adequate security or warrantable pro pect of advantage, or even safety, to the bank. Such advances not only account for mote than half the whole loss no ti disclosed, but the secuti'hs held being more or lets unpioduciivi, imtaii the carrying power of the bank pending their realisations. “ Socth Island (New Zealand.) “In the south of New Zealand heavy losses in the past, meuned to a large extent through rash or dbh'iiient management, have been so far previously written off and provided for, but the securities, in themselves of a sound char«cier, have been held without adequate allowance for

the f»ll in values, and the deficiency ha* now to be recognised. “ Helping Themselves “ Finally, wo find that, advances have Iven made to some of the directors upon insufficient security, and from these advances heavy losses have arisen, estimated by us as over £160,000, while certain transactions have come under our notice c tiling for the gravest censure, if not fnr mere specific action. The connection between the bank and the New Zealand Loan and Mercantile Agency Company, by the chi»f and other officials of the bank acting for the lorn company, and being interested in the wotkutg of both, has not for many reasons been advantageous to the bank, and should on no account be •iliowed to continue, as we consider the company has been unduly favored by the bank. “ Thb General Manager. “ As regards the responsibility for this slab* of things, the directors, ns yout notirnees, entrusted with the full powet of the bank, are no doubt primarily responsible, and, beyond remarking that the real control of tha bank’s policy appears lo have been for many years in the bands of a limited cirrde with which the bile general manager w»s intimate'y associated, «e should probably have said no more on this head buo for the eircumsta co that on application to th»t gentleman fo* 1 an explanation of certain accounts h" r ferred us to th- inspector, who he alleged had been de facto general manager for five yonis, i.e., since 1883. Wo have he?n at some pains to clear up this question, and we are of opinion that Mr Murdoch’s allegation is not only unsupported by the b ok records, but is disiinctly negatived by the board’s minutes an 1 other ovidetice. We find, furthrr, that up lo 1886, when the Holt frauds were brought lo light by Mr Mtnray, Mr Murdoch was the only official fiotu ilto head office of (tie bink who ever inspected or 'reported upon the branches i" Australia, nnd the tfivoiive control of that business, as well "s of the* accounts i>■ New Zealand which caused the bulk of the losses we no v deplore, did not pass lo Mr Mtnr.-ty till the bulk’s money had keen advanced and the evil virtua'ly done. We think it oiry due to him and the other senior officers to acknowb dgo their loyal adhorer.ee lo the bur,k , ami their efforts to conserve your interests under circumstances of very exceptional difficulty. “ Future Provisions. “ So much of the capital having been lo t, ii must be ncccss ri'y written rff, and ihe shares reduced from £lO t'> £7 paid up, otherwise no dividends could be paid till the Mnoiint lust has been iepl»3 j d out Of future profils. This would leave the paid-up capital £700,000, and the reserve babiTy £1,010,000 We have obtained the advice of London counsel that this writing off can be legally done, and you will bo asked to give the requisite authority. We shall, howevor, ask your authority to apply for statutory contirmaiion of the a'teration, and for power to the directors at lheir discretion to accept at some future time from sliarebnlde's who may be willing to repay the £3 per share written off, they reinstating their shares at the original p tid-up amount without increase of the reserve liability a’ready attach! g to the shares. The expediency of increasing the capital is so obvious that wc need not occupy your time in discussing that point further than to say that it is not due to the financial need of the money, but to the necessity for an increase I amount of capital sufficient to ensure the stability to the bank and confidence to its depositors, “New Shares. “It is proposed to take authority to create 100,000 new shares and lo issue 50,000, wlrch would make the paid-up capital £1.200,000, and the reserye liability £1,500,000 ; and we are pleased to be aide to announce that applications have already been secured in London for 20,000 shares by firms and persons of the very highest financial standing, which not only ensures the success of the operations, but gains for the bank new connections in the best financial circles connections which the directors value highly, and will do their utmost tostrengthen. Applications con'd have b-en seemed for a larger number, if not, indeed, the whole issu , but it has b en 'teemed batter to reserve at least ba'f for the colonics. Probably 25,000 will be offered in London at £1 premium, and 25,000 m the colonies at par,” After referring in general terras to the hopeful prospects of the bank, n resolution was carried to increase the capita l of the Bbnk by £1,000,000 in £lO shares. The meeting shortly aft*r*ards adjourned for a week. London, Oct. 2. A deputation from the committee of audit appo'ntod in Auckland to iuvesligale tbeaffiits of the Bank of New Zialnnd lias submitted Ihe present position of the bank to the chief financial houses, capitalists, and banks in London. After a searching examination, £200,000 of new capital lias been privately subscribed by leading capitalists not hitherto associated with the back, including a director of the Bank of England, Messrs G'ynn, Mills and Go,, Lord Hind lip, and others of the highest, reputation. Additional capital was offered but declined. The policy of facing the situation boldly is approved in ihe highest financial circles.