BANK OF NEW ZEALAND COMMITTEE.

Wairarapa Daily Times, Volume XVI, Issue 5116, 29 August 1895, Page 2

BANK OF NEW ZEALAND COMMITTEE.

THE OFFICIAL REPORT. ' B\j Telegraph. Wellington, Wednesday night, The Committee appointed to inquire into and report upon the Bank of New Zealand Estates Company and its relation with the Bank of Now Zealand, and to onquiro how in tlio Colony's interest, the two institutions can ho soparated, and how tlio earning powor of the Bank of Now Zealand may bo increased, itK stability insured, and its usefulness oxtonded hayo the honor to report as follov.s: —Before proceeding to investigate the several niattors referred to it by both Houses of Parliament, your Committee received from tlio Colonial Treasurer tho following letter addressed to him by the Directors of the Bank of New Zealand, which explains why Parliament has been called upon to deal with the question.

" Bank of Now Zealand, Wellington, 17 August, 1895, Sin,-I have tho honour to quote foryour information the following minute' passed by tho Board of tho Bank, at a meeting held this morning Parliamentary Committee to inquire into tho affairs of tho Bank of New Zealand Estates Company, and the Bank of New Zealand, with a view to separating the Estates Company from the Bank, and increasing tho earning power of the Bnnk. Hesolved to place on record that it was tho desire and expressed wish of the Directors, made at conference with Ministers that this Committee of both houses should be appointed. I have, etc., W. Watson, President." The Hon. tho Colonial Treasurer, Wellington,

Your Committee hayo, since appointed, been continuously engaged in going into the several matters referred to, and have had before them the President of the Bank, Mr Watson, all the Dirootors of the Bank, Mr Butt, Mr Foster, the General Manager of the Estates Company, MrMcKerrow, LandPurchaso Inspector and Mr MoGowan, Commissioner of Your committee have had before them the balanos sheets of tho Bank of New Zealand, balance sheets of tho Estates Company, and of the Auckland Agricultural Company, combined balance sheets and statements concerning the business of the Bank and the Assets Company, which aro appended to the report. Your committee find that the present Directors of the Bank are not responsible for the present unsatisfactory condition of affairs. The Committee consider that the present Directors' have acted efficiently since they took ollice, and haye candidly and fully given every information to the committee. There is a deficiency of £376,90Q, and a contingent dependency of £200,000 in the Bank. There is a deficiency of £467,077 in the Estates Co., against which no assets exist, and i\ further deficiency of £444,601 in trading concerns properties outside New Zealand, These altogether amount to £1,488,578. Of this sum, £148,110 which, though shown as a liability, is really a debt duo by the Agricultural Company and represented by assets, deducting this from the aforesaid sum of £1,488,578, there remains£l,.34o,46B. This is provided for as follows: —Capital of Bank, £900,000; estimated amount of call, £450,000; total, £1,350,000; leaving a balance of £9532, which goes to a dependency account." Your' Committee are""of opiiiioil' that in tho' present financial ci'rciimstiinces fa'f the Colohy; and taking into consideration the financial position of the Australian Colonies and also considering the magnitude of the interests, both public and private, which are involved, as we|l as the widespread disaster that would follow should tho Baiik bo compelled to suspend bpei'atiohs, tire Colbny should render shelf assistance fo tlio ; ]3a : iik" as will restore confidence, jhsuro'sfabilty.jndepable it to carry on its business in ti satisfactqry q,wl profitable manner, tho Commit-too is of opinion that any assistanco should bo of an effective and delinito character,

In, support of tho Coinmittco's opinion,' if may be stated that it has been found that "apart from aiiy indirect injury to the country, flip following interests would' be directly affectei} by any disaster to the Bank. As will be seen from returns pnopl, there were on tho 31st March 1895 in Jfew JJoaland, tho other colonies, and London, deposits in tlio Bank of New Zealand to tlionumberandamountasfollows: —Now Zealand 35,110 depositors, representing £5,032,900 ; other colonies 2,839 depositors, representing £530,223 ;London, 3,351 depositors, representing £1,578,632; totals 41,300, depositors representing £7,i ; i1,705'. •'■This includes Govern? ment' ' 'deposits" 5 nltiountiAg 'to £1,145,396/ Tho tbfiil number of advances by fjjo J}p]c on'the'3lst March, l$)o, and" flie nnioimf of same in flew Zealaiui, the' 'other colonic?, ij,ml jn Tjqndon" was as" foljoffs: liety Jsea!ai|d', j 6,51)5 adyances amounting to £5,428,222; ofl]er colonies, 1,277 advances amounting to £1,463,516; London, 137 advances amounting t0f300,915; total, 17,007 advances amounting to £7,192,653. Tlio shareholders in New Zealand number 1050, liable for £403,000. s|i6%iai'oilltj llranch Banks, and 28|584 iiiwdnt accp'mifs, !l |ho (lisjcoijnt account; representing' traders' aco.eptgfi.pps, e<||iai SJS6,()QOj the Colony of few Zealand, jnde'pond : ontly of the !! A " and remittances lntranstpy Is preditoi l to tho Bank for £1,403,000, the amount in New Zealand being £458,000 and in London from (htf evidence taken aqd the balance sheet submitted, it wil'l bo found that tho Bank of New Zealand and Estates Gompaiiy,' though two iimnjc, mctic'ally biie institu; tion; ■ that the Estates Colripany antj the Auckland Agricultural Company though under different names, aro

prijcfjcally ono concern and that the 1 fcombined'|states' Company, j ■ 'and ponjpany and ' flank (|f New JjcalamL. are pract'i- ! orally pno ponpern; the ijiyisjon is in ' the nanie, only beciwsptlie whole of 1 tho shares in the Estates Company ! are owned by the Bank of' New Zea- ' land.theonly interest hold outsidothe ' Bank, being the debenture-holders '• who recently acquired live hundred thousand pounds' worth of the debentures previously held by Baron I Schroder, and the debenture-holders ! of the Auckland Agricultural Company, who hold £282,960 worth of f (johentni'es. Yqur-Oommittee is of 1 opinion'that if Wqiijd'bt! jii'the'best 6 interests of the Colony, of the share- { holders of the Bank'qf Ifew Zealand, ' of all concerned, tbat of S the affairs qf tl|e flank qflfew Zea(andand the Estate Company should ' takeplape, '•• •.■ fi In dealing with so momentous and !, intnoate a question, -it is necessary that every precaution should be taken to safeguard the Colony against „ losses and to render future applica- 1 twufoi'theintwyentioaufFavJiameat J

unnecessary to effect this, your Committee recommend that the whole of the freeholds, leaseholds, stations, stock and implements in New Zealand, be disposed of, and the Bank of New Zeftlaud and. Estates Company soli them to a Realisation Board, to be established for that purpose. That an w Realisation Board, three members be created as herein after provided; that the Assets Realisation Board be authorised to issue bonds for £2,734,000 bearing ■H per cent, interest, and that the deficiency, if any, on these bonds after the realisation of the New Zealand Estates Company's properties bo guaranteed by the Colony to the Bank. In return for these the Bank of New Zealand, the New Zealand Estates Company, and the Auckland Agricultural Company, to transfer the whole of the property rev. ferred to, to the Realisation BoaroV for liquidation purposes; that '* £500,000 of tho uncalled reserve liability of the Bank of New Zealand shareholders be called in, in four equal instalments, the first being payable on the 30th June, 1896, the second on the 31st December, 1896, the third on tho 80th Juno, 1897, and the fourth on the 31st December, 1897. That to encourage the shareholders of the Bank to meet the call of £500,000 proposed to be made, Jfiß Committee recommend that thoret charge on all annual profits of the Bank, beyond £50,000 per annnm, should be a payment of interest not exceeding 6 per cjnt on amount paid by shareholders on tho call as | aforesaid, That the Bank of New I Zealand out of its profits p»y to the Assets Realisation Board the sum of £50,000 per annum, as ' hereinbefore mentioned, and any further sum which. may then remain after paying fivo per cent, to ordinary shareholders, until any deficit on realisation is provided for. Your Committee are of the opinion that the last valuations of stations and landed property may, under favorable circumstances, be maintained, but the mora prudent course would be to allow for further depreciation, That to ensure the Colony against any loss on account of guaranteeing any deficiency that may arise on bonds, in addition to the payments from profits aboyo provided for, security be given over tho freeholds, leaseholds, stations, staftc and implements in New Zeal® the Bank's latest ascertained value of which is £1,879,000 and over the second call of £500,000, and also over the balance, £500,000, of tho uncalled reserve liability of the Bank shareholders. That the first call—the last payment of which is due on tho 2£ith November next, estimated to amount to £450,000 together with the present paid-up capital amounting to £9O0 v OOO be written off the provide for lossos, qf which £l,ioo,ooois forascertained losses, and includes £9,532 which is proposed to be held as a dependenoy and £200,000 as a contingency for unascertained loss, in conjunction with the proposal, and to enable adequate capital to be provided for the Bank to carry on its business and restore its credit, your Committeo recommend the Colony to subscribe £500,000 for preferential shai«s bearing 31 per cent interest, and that tlioy bo paid for by tho issue of 3f per cent, stock to the Bank, the Bank* have the right to purchase all of these shares,' provided 'tlioy [ire sold, the presoiit Bank 'shareholders to'havo priority.' " ' 1 J ' This, with tho £500,000 of capital 'from tho second call of the reserve liability will give the Bank of Now Zealand a clear capital of ono million (£1,000,000) sterling. In addition tb this, the position of tfiq Bank will ho strengthened by having the whole of the £2,000,0,00 o£ |A! Stock for use initsordihary bust ' Under' the" altered pOsi'tiqii that' the Bank will occupy, tliesq proposals if given effect, Will' put it 6n a sDundhasiß. On your Committee ascertained that the second million "A" stock now

invested according to law, in liquid securities, entails a heavy annual loss 011 the Bank. To prevent thjs incurring' loss, aw| in 'pnjef'fjj increaso' tlio earning pq\yqc of thq Bank, your Cqmniittee recommend fliajitlie million he freed and madq available fqv pp in iho' Bunk's general business; ami to fuvtlioi) wiablo tho flank to increase its earning power, your Committee. of opinion that the Bank should bf at liberty, if deemed advisable, to secure further trade by purchasing other banking business, but that no purchase bo allowed unless with tho sanction of the Govornor-iu-Uouncil, and that to enablo this to bo done, section three of" The Banking Act, 1891" be repealed; and. furtherwith a yjovv' <t]ie ■ oarnjng power" of tiie Bank; the 'Qoinifiittel recommend 1 thai tho ; Colony J s blisiM }>} laiiglapd bp fransactqd by tiie Bank of New Zealand'. 1 ' r ' ' ''jMio directors of the Bank a;;o of Opinion tljat jf '(l^e' |;qcQi)|qen'(jf[l (apus he givei) effect to, thp. net piling power qf the flank will be so increased as to loavo a profit of £135,000 per annum, That in coneideration of the £500,000 preferred shares to be taken up by tho Government, the Colony should havo further representation and that tie G.oyernpr r in.pqiinpjl, I |]q,()|jmq W evcid to Appdiht'dno Qirwtfe ;:, I* •<* Tliit' the 'Assets Realisation Board

ghit!j oqpisfc'of three members • in-i)s-n)uoii ag the Oolnny has gqay> fvnteecl the deficiency, if'ftny, on tl|o|. bonds to bo Issued by tbo sold Bq?*| tho Govornor-in-Counoil shall appoint tivo members and the Directors of the Bairn 01 «uw /jenuiim ono member, '£1)1? ponjnjjttee MB of the opinion that the' shaVei [holders of tho Bank should!''be prohibited' by Law from winding up thd 'Bank until tho Whole-of thd ftWfe 8 !? CJoloiiy aye f his is (iii obvious precaution, considering the large responsibilities of tho Bank to th? Colony,' aid tho pommittee ajso refiommond thq,t tliq' pqwer under" The snlf Act, 1891,'' bo amended so that the' power to appoint a roooiver shall ■ arise on any default of the Bank. The proposals of the "Committee deal o"ly with the landed properties, statious, stock, implements, etc,, in New Zealand. The trading concerns, both in and outside New Zealand, I and properties owned by the Estates.. Company outside New Zealand, have informed-the Committee tbt the latter properties maybe realiJjt 11} two -years. The Direotors-hayT eo far'written down in 'value,'tli£{ tW Committee is of opinion- that tliere need be no delay 'in 'caiTying qut those iqnjediale' Tlio qf jihe trading concert tqi' sale, and it would be Mifydvisabllj to fiirnisli oil thg details connected' ivith thorn, With the papers appended to. the ,'eport will be found a scheme sub- - flitted by tho Directors of the Bank >f New Zealand. The Committed Ji4 Dotswits way to awoptit, sewnjsf