BANK OF NEW ZEALAND.

Waikato Times, Volume XXXI, Issue 2533, 4 October 1888, Page 2

BANK OF NEW ZEALAND.

Special Meeting of Shareholders. (BY TELEGRAPH—OWN coreespondent) Auckland, Wednesday. At a special meeting of the Bank of New Zealand to-day, the report of the shareholders committee was presented. The report states :—" Our examination disclosed a mass of securities taken in support of weak accounts, the value of which had fallen greatly, and many accounts in liquidation, or which ought to be so, the cover for which had become obviously inadequate, altogether involving losses which the directors had not faced, but which upon rigorous examination we feel convinced will absorb not only the whole of the reserve fund, but also nearly one-third of the paidup capital of the Bank, say £800,000 in all. It is obvious to us that for years past the Bank has been paying rates of dividend which ought not to have been paid. Securities have been held and accounts kept going in the vain hope of the values placed upon them, in what was in fact a period of inflation ; and supervening upon this, within the last two or three years, heavy losses in Australia brought matters to a climax, which we are nowunder the unpleasant necessity of facing. The principal Australian losses have been made in Sydney and Adelaide, where 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 Bank's funds, and in Adelaide money appears to have been advanced, or rather squandered, in a way which can only be characterised as reckless and disastrous. In Auckland we regret to find that though the head office of the bank is there and its alfairs are under the immediate eye of the directors, the general character of much of the business carried on has been most objectionable, and the policy pursued open to grave censure. Inflated schemes or proposals coining from, or influenced by, certain persons appear to have met with rea,dy support by lavish advances to companies and individuals without adequate security, or warrantable prospect of advantage, or even safety, to the bank. Such advances not only account for more than half the whole loss now disclosed, but the securities held, being more or less unproductive, curtail the earning power of the Bank, pending their realisation. In the South Island of New Zealand, heavy losses in the past, incurred to large extent through rash or dishonest management, have been so far previously written off and provided for, but securities in themselves of pound enough character, have been held without adequate allowance for a fall in values, aiul a deficiency has now to be recognised; and finally we find thai; advances have been made to some of the directors upon insufficient security, and from these advances heavy loss has arisen, estimated by us as over £100,000, while certain transactions have come under our notice, calling for grave-t censure, if nut for more specihe action. Tho connection between the Bank and the New Zealand Loan and Mercantile -Agency Company, and by the chief and other officials of the Bank acting for the Loan Company, and being interested in the working of both has not for many reasons been advantageous to the Bank, and should on no account be allowed to continue, as we consider the com pany has been unduly favoured by tho bank." The report proceeds in detail to deal with the Bank's operations, and then explains the measures taken and recommended to re-establish confidence In the directorate, the chief management has already been ra-consti-tuted. The committee propose that threo pounds per share be written off, making the shares seven pounds each, the directors being empowered hereafter to accept three pounds from shareholders willing to reinstate their shares at the old value, Without increasing their reserve liability, it is further proposed to create a hundred thjn9ind new sliares, issuing fifty thousand, making the capital £1,200,000, and reaeivo liability £1,500,000. Application for twenty thousand shares has already been secured from London firms of highest financial standing, and a much larger number could have been placed, but it is preferred to strengthen the Bulk's colonial connection by issuing half the shares in the colonies at par ; the other half in London atone pound premium. The committee express a strong conviction that these measures will place the bank in a sound position, and they take a hopeful view of the future, being satisfied, after a careful review of the half-year's business just closed that the Bank's legitimate business even now is capable of yielding good dividends, notwithstanding the existing heavy drawbacks. The meeting, almost without discussion, adopted resolutions authorising the measures recommended by the committee.