FINANCE AND TRADE.

Wairarapa Daily Times, Volume XVI, Issue 5162, 22 October 1895, Page 2

FINANCE AND TRADE.

Specially compiled tor llic' Wairarapa Daily Times.* THE BANKS' AGREEMENT. 3 The sensation of the week has 1 been supplied by the provisional agreement of sale and purchase " entered into by the Bank of New Zealand and the Colonial Bank. The 3 " higk-falutin" of the Hon. George ' M'Lean has had no offecfc on the officials of the Bank of New Zealand, ; who have amply protected themselves, ' indeed, it is a question whether, in their efforts to make a bargain they 1 have not over-reached themselves. The sensation, however, is as to the '' terms which the Directors of the ' Colonial Bank have seen fit to accopt. ' j\u impartial.critic looking at the terms cannot help but come the conclusion that the Dank of New ! Zealand stands in the position of ' liquidator of tlio Colonial Bank, There is nothing else in it. ThoB.N.Z. lias hedged itself in with £327,305 to secure itself against loss 1 in the washing up, and probably this ' sum will be more than suicient for the purpose. f TUB TERMS ANALYSED. , The consideration to bo paid the . Colonial Bank is £161,211 for its ; very excellent business and goodwill added. The Colonial Bank's affairs appear to have been split up into five parts, A, B, C, and D lists, and | goodwill. The purchase money | indicates that the whole capital of ' the Colonial Bank, amounting to ; £400,000 is to be returned to the ; shareholders, together with £61,211 [ for goodwill, and if these sums wore ' not subject to leakage, the Colonial j Bank shareholders would stand on 1 velvet. But thoso lists bar the way, ' and the Colonial Bank shareholders cannot be congratulated. Tho A list ' contains tho only assets that tho I Bank of New Zealand will accept as sound and pay for in cash, and these 1 assets amount to £133,906, The bulk of the purchaso money is detained by the Bank of New Zealand against the B and C lists, the realisation of the assets in these two lists is undertaken by the B.N.Z. The amount held as cover by tho purchasing bank is £327,305, and any surplus arising from tho realisation of any of the accounts in the B list is to be applied in aid of any deficiency which may arise in any other of the accounts in the samo list. The C list cannot contain much that is good, and the soiling bank is required to indemnify and protect the purchasing bank against any loss or deficiency in tho realisation of thoso assets, but for this consideration the purchasing bank must forthwith write down the accounts in the C list by the amount detained and setagainstthis list, and which forms part of the £327,305 held as cover by the Bank of New Zealand. The D list is rejected by the Bank of Now Zoaland, loaving the assets thorein specified to be washed up by the Colonial Bank, and in the interests of the shareholders of the selling bank let us hopo "there's something in it." It will require a good doal of faith to believe in tho D list, aud shareholders as a rule possoss an abundance of faith,

I WHAT WIM, TIIEY GET ? Whatwill theCplonialßank share. i holders get? At first sight it would ■ seem that they receive £133,906 or 13s 4d per share in cash, with a further dividend later on, when the B and C assets are realised and provided there is a surplus. What the surplus will amount to no one can tell; according to tho agreement it should pan out £327,305 less the amount written off the O list (that is supposing the purchasing,bank, elects tohaye the amountwrittenoff.) The Band C lists must be olassod as the " doubtful" and " very doubtful," and their realisation will not leave much for the shareholders. But before the Colonial Bank shareholders can expect anything, provision will have to be made for satisfy, ing any contracts that may exist with bank officers; for fulfilling the various guarantees and indemnities to the purchasing bank; for the costs of liquidation and expenses incidental thereto. Wlp all these p.royisiqn's are made, tho Colonial Bank shareholders may consider themselves fortunate if their total dividend equals £1 por share. THE RESULTS. The l'osults of the proposed agree-, ment if oarried into offect will be to make tho Bank of New Zealand official liquidatorofapartof the busineis of thi Colonial Bank, with'ouf

receiving any ; material benefit by tbo operation, TheaccouiitsontheAlist boing all Rood, the holders will, after tho exposure, deem ifc prudent to leave for fresh fields, and as a muttor of fact, tho Australian Banks Rnd tho National flank aio delighted with tho agreement, for it means a J great accession of businoss to thorn, k The officers of tho Colonial Bank, or such of thorn as avo not required, which will bo the majority, will bo oast upon the world nnd form part of tho already swollen ranks of tho unemployed. Scant consideration lias boon shown tho officials of tho Colonial Bank, and evoryono m»st sympathise with them in this matter. Another result will be to «ivc the Official Assignees a great amount of work. A number of bankruptcies nro inovitable, and we shall probably seo some apparently prosperous firms toppling over, InOtngo and Southland the coming Christmas will lie cheorless if this amalgamation comes off. Tlioso accounts in the 11 and C lists are to receive no more credit except with tho consent of both _ banks, and this means throttling the business of many a man, who, if he eanuot find an anchorage with one of tho other monetary institutions, must sink. The South Island will feel the pinch more than the North, for tho Colonial Bank does the bulk of tbo Southern business.

fWIU lIIK ACBEEMEXT STASH. It is quite another matter when we come to consider the point whether | the agreement will be vilified. First j of nil it seems that tho agreement is ultra dm, for according to clause 36 of the Act of this session, the flank of New Zealand is empowered to purchase " the business and assets of such other bank, excepting such portions of the assets of the selling bank as the Directors of the Bunk of New Zealand and the auditor appointed by the Governor under the Shave Guarantee Act, shall certify in writing to be in their opinion bad, doubtful or valueless." The II and C lists are manifestly of a doubtful character, and it remains to bo seen bow the point is to be overcome. There appears also to be an irregularity in submitting the agreement to Parliament, for according toclause 37 of the Ad, the acceptance of the terms by the shareholders of the I selling bank is necessary before the approval of Parliament can have any effect, The irregularity of submitting tho agreement to Parliament •j&foro submitting it to the shareholders is not accidental I think, and it would not surprise mo if a Bill is brought in, depriving the Colonial Bank shareholders of any voice in the 'i matter. The banking businoss has got to such a pitch, that either the agreement must be ratified as it stands, or tho Colonial Bank shareholders must force their institution into liquidation. This latter course would probably bring them in better 1 results, and it is quito on the cards that this may be the final outcome of tho negotiations. There is bound to bB some very plain speaking at the meeting of shareholders ofj the Colonial Bank, whenever such a meeting is held, for unquestionably they have been led to believe that the Colonial Bank business was worth a a good deal more than the Directors seem willing to accept. TIIE BETTER JURVET. Tho price of butter in the Loudon has gone up like a rocket, foaiiisb advancing from 118s to 1345, , . and Colonial from II 2s to 120s. The advauco is due to small stocks, with a prospect of short supplies until Christmas. New Zealand does not stand in with this advance, but may catch tho market later on, About the end of this month it is expected that fully 100 tons will bedespatched from Wellington, and this lot may > strike the market at the right moment. Now Zealand is not tho only shipper of butter, the other Colonies will have a large output this season, and presontly tho market will be glutted and prices tumble down. Now is the time when acareful regulation of the supply would make a difference of many thousands of pounds sterling, but regulation is not possible under present conditions. SIIVER. The price of silver has shown a tendency to harden, and a recent quotation of 31] dis the highest price recorded thisycar,andis better ( than tho average price of last year. The fall in silver may be judged iSiym the following figures, which Bre a record of the average prices : In 1890 the average prico was 47£ d per oz,, falling in 1891 Mod. In 1892 it declined to 39fd, in 1893 to 35fd, in 1894 to 29d. In 1859 the average price of silver was 62Jd, so - J that the white metal has dropped 50 per cent, in 37 years. weuixgion (us coiirm. The company is about to call up £1 per share, on the shares which are now only £1 paid up, The addi- • tional capital is required for improvements and extensions which will iuvolvo an expenditure of about 4 £20,000, The Gas Company is doing romarkably well, notwithstanding tho oloctrio light competition, and with its presont plant is barely able to cope ivith the demands of gas consumers, Tho call is welcomed by the shareholders, and as evidence of this the £1 shares are very firmly held with plenty of buyers. Percy Peslts.