THE BANK AMALGAMATION.

Temuka Leader, Issue 2713, 18 September 1894, Page 4

THE BANK AMALGAMATION.

Wellington, Sept. 14,

Tb. 6 agreement entered into between the Hoa. G§9 rge McLean and Mr John Murray for the amalgamation G f the Colonial Bank with the Bank of New .Zealand, subject to the approval of the Government and the shareholders of thp respective bunks, was laid on the table of the House this afternoon by the Colonial Treasurer. Under the agreement the assets of each bank are to be reviewed by a board upon which the other bank’s representatives shall be preponderant. The Bank of New Zealand is to take the nefcessary measures to increase its capital by the creation of new shares of the nominal value of £1,000,000, Of these £400,000 worth is to be issued to the shareholders of the Colonial Bank in lieu of the present pafd-np capital of that bank. The shares so issue# #re to be considered as fully paid op shares ##4 tp carry no further liability whatever, Tjpe remaining £OOO,OOO of shares is fo yssjte# the president of the bank, and is to fee bold for the present as unissued, but to bo at the disposal of the Bank of Now Zealand or thejf transferees at a period to be ap pointed by the dfregtQr# of the bank, but not later than 1903. The Bank pf New Zealand is to write down its present paidup capital of £900,000 to £6OO/WO. _ TJio first board of directors is to consist .of ££v.ou members, four elected by the shareholders .of the Bank of New Zealand, and three oiefted by th« shareholders of the Colonial Bank. With thh exception of the principal executive oncers, jth,°/?9l cerß of the bank are to be selected by tte new board of directors from the present staffs of both banks. The officers dispensed with are to he compensated by their respective banks. The nurelmldo assets of the Coloniui Bank are to ho liquidated, and the reserve fund and the undivided profits of the bank are to make good any deficiency resulting from the liquidation.

Any surplus is to be divided amongst the shareholders of the Colonial Bank. If the reserve fund and profits are insufficient to make good the deficiency, then a call shall be struck on the Colonial Bank shares. The unreliable assets of the Bank of New Zealand shall also be liquidated in the same manner as those of the Colonial Bank. The £300,000 released from the capital of; the Bank «f j New Zealand, the. reserve funds, and the undivided profits, shall be used to make good any deficiency resulting from the liquidation. If any surplus remains it shall be credited to the Bank of New Zealand Estates Company. The present premises of both banks are to be valued as going concerns. Should the valuations of the premises of the Bank of New Zealand exceed the sum at which the whole of the premises now stands in the books to the bank, such surplus shall be credited to the Bank of New Zealand Estates Company, and any surplus arising by the valuation of the premises of the Colonial Bank shall also be credited to the liquidation account. If it is an integral part of the agreement that before the amalgamation takes place legislation shall, be passed by Parliament by means of which the Bank of New Zealand Estates Company (limited) will be entirely separated from the bank, so that the present'shareholders of the Colonial Bank, who are about to transfer their capital, and the future creditors of the Bank of New Zealand may run no risk whatever from the bank’s connection with the Estates Company, or from future advances to it. After payment of 4 per cent, per annum on guaranteed preference stock, and a 6 per cent, per annum dividend on other paid up capital of the bank, and after placing £20,000 per annum to a new reserve fund, all other profits and dividends shall be applied to reduce the ultimate deficiency of the Bank of New Zealand Estates Company. The bank is to afford the Bank of New Zealand Estates Company necessary banking facilities for carrying on and liquidating the business. The amalgamation is to take effect within fourteen days after the shareholders of both banks have passed a resolution, or by consent of both parties' may be extended to two months.

In a memorandum to the Government, Mr John Murray points cut that the presence on the Bank of New 'Zealand balance-sheet of a large sum representing shares in the Bank of New Zealand Estates Company is a source of weakness to the bank, and the Colonial Bank reasonably makes it a condition of the amalgamation either' that it be en tirely removed or that the Government undertake to'make good the ; ultimate deficiency. By the redemption of the £1,500,000 per cent, debentures and resumption of‘ some of the estates under the Land for. Settlement Act, and by assistance from the bank the incubus can be got rid of.