BANK AMALGAMATION.

Auckland Star, Volume XXV, Issue 220, 14 September 1894, Page 2

BANK AMALGAMATION.

SUMMARY OF THE PROVISIONS THE ESTATES COMPANY SEPARATED PROM <: THE BANK.

EACH BANK TO CLEAR ITSEI^ OF DOUBTFUL DEBTS.

(FKOM OTO PABLUMESTAEVCOBKESrOM>BNT.J | J

$ Wellington, this day. l I am enabled to send you this afternoon,... the full text of'the proposals for the amal. :;j gamafcion of the Bank of New Zealand and >- Colonial Bank, which are now under coa» iideration of the Government, and werd i laid before Parliament to-day. It will be seen from, the proposals thai s there are three distinct features. One U■ ' complete severance of the Estates Com* pany from the Bank of New Zealand under; I independent control, and against its realisa* tion the colony is to have an immediatis amount of £2,100,000 held as collateral I security, and. in addition to thab tha new Bank is to pay all its profita after certain reserves into the Estates Com* pany account. From this ib is anticipated that half-a-million will be paid during tea years. The £1,500,000 of- 5A per cent, debentures of the Estates Company now cur- , renb, and which are a heavy drain upon its

resources, are to be paid off. This is to hi '>■: done without raisins: any more money by loan, and it is understood thab bo far a* the colony is concerned no additional ■ liability on this head is to- be undertaken^ The principal cause of the financial ' trouble to the Bank of New Zealand and . the incubns which is hanging about tha colony ab the present time is the uneatis* factory position of the Estates Company, A proposal to sever ib entirely from the Bank will enable the new bank to com- ; mence a fresh career, unhampered by the '■■'■ weight of the Estates Company, while thai •'|; colony will enjoy the advantages of having • the, latter wound up" by degrees. Tha; \ severance of the Estates Company . cannob be accomplished without) tha co - operation of another bank, unless the colony agrees to further guaran* [ tee capital. The second feature is thab in tha process of amalgamation each Bank id to bear the responsibility of any losses otf provisions for bad and doubtful accounts* They are to be surveyed by 'a Board, 09 j: other tribunal, with a preponderating >; number against the Bank whose account ig under review, 'and £40b;000 is to be iei "-'■• aside by the Bank of New Zealand to meet any bad or doubtful accounts. Tha Colonial Bank is to set aßide the whol^ °£ its reserve fund and' accumulated profits, and, in addition to that, the un« , called reserve liability of shareholders o** i £1,600,000 is to be held against the eamg, contingencies. The third feature is that all profits, afte* ; paying 4 per cenb. on guaranteed prefers ence stock and 6 per cent, per annum div^ dend on other paid-up capital of the bank ( and after placing £20,000 towards a new reserve fund, the balance is to be ap* plied ■ to' reduce the deficiency ol ; the Estateß Company. tJpon th 4 whole 'the scheme is a very compieb? V one. Every poinb is difficult and very in^ tricate, and the subject has evidently. been well thought out. If such a scbenu as this can be carried on, a powerful bank*' ing institution will be established, and thscolony will be relieved from the uncertainty ( surrounding the Bank of New Zealand by the attachment of the Estates Company to 1 ib. The facb of each Bank having to clea"' itself of its bad and doubtful accounts i» a satisfactory feature in ths proposal. [The full text of the agreement appears on fage 4.] v