NEWSPAPER COMMENT.

Auckland Star, Volume XXV, Issue 222, 17 September 1894, Page 2

NEWSPAPER COMMENT.

(By TELEGRAPH,—PARLIAMENTARY RE-

PORTER ,)

1 Wellington, this day,

In a loader lon the banking proposals, which are the staple of talk ab present, the " Post ''of Saturday says that if the scheme is carried out on the lines laid down by Mr Murray and Mr McLean, the union of interests will prove beneficial to shareholders in each bank and advantageous to the colony. .Speaking of the proposed severance of the Estates Company from the Bank the journal Bay* "The Bank will be giveu new life and enabled to begin a new career free from the Estates Company, but as the Bank now stands ib is nob strong enough to eflecb the desired eeyerance. Ib needs new blood, new capital,' and strength, which will come to it from cooperation with another bank. The only altenative to Government Bupporb of this kind must be additional direct assistance by way of guarantee from the colony, assistance which for obvious reasons it is undesirable should now be sought . for. The first poinb in the new scheme, the complete separation to be effected between the Bank and the Estates Company, is^one which musb strongly commend itself to the approval of everyone: who realises the pre-. sent financial position, and the evils and dancer resulting from the connection. The newly • constructed Bank will commence with the good business which two banks have accumulated during the past, and entirely freo from any of the bad business into which either has been led. The new Bank could scarcely starb under more favourable conditions, and on tho whole," concludes the "Post," " this well-thought-out schema must benefit everyone if ib is carriod. To the shareholders of the Bank of New Zealand it will afford inestimable benefit or relief from pressure of tho Assets Company, and it will open to them the prospect of a fair dividend on their capital as tho product of operations of a sound and strong bank. To the shareholders in the Colonial Bank it offers parti' cipation on fair terms in the business of a great national bank, instead of bearing the straio of carrying on a comparatively weak and struggling one. To the colony ib offers some prospect of finality in regard to the liability it has undertaken as guarantor of the existing Bank of New Zealand, and indirectly of the Estates Company, and to the general and commercial public a great) advantage will be secured of having established a thoroughly strong and sound locallymanaged bank, mainly owned in thecolony, while all sections of the community will beneit from the'clearing up of all the accumulated bad business of the two banks during their past careers. This will put ,bua}nejßs on a sounder basis than it has occupied in this colony for many years past. The proposed amalgamation will really lessen the banking risks which the colony has undertaken, and will increase the collateral security it holds against those risks."

The "Times" this morning, discussing the Bank Amalgamation Scheme, says: " Ab first eight a proposal to guarantee the outcome of the Globo Aaseta Company's share account, which is an essential condition of the banking amalgamation agreement, does not look like minimising risk. It looks like increasing, it, and probably discussion will mainly turn on this point. Were the proposal to mean that th&icolony guarantees that these assets will realise the amount ab which they stand in the bank's balance-sheet.fchere would be an end of-jthe matter once and for all, but this is— and it is important to note it —exactly what the proposal does, nob mean. It only means that the Colonial Bank shareholders and creditors will not lose in the event of a deficiency greater than the amount of the items seb forth ia Mr Murray's memorandum of the nominal value of £2,600,000, will suffice to cover/plus the £2,000,000 guaranteed stock which it already assures to creditors sufficiency of banks assets, including this share account to meet its liabilities. Before the understanding now suggested could involve any actual charge, the £2,600,000 must first be exhausted, then the £2,000,000. We do nob suppose that tie most pessimistic critic will assess the depreciation of Globo assets at the aggregate" of these two remarkably large sums, which greatly exceeds the total book value of those assets. . The transaction appears highly feasible. On the other hand, the advantages of separating these Globo aesets, diminishing 5£ par cent interest on the/Estate Company's debentures, and winding up the whole concern, are obvious, find their bearing very far reaching. In the management of the o perationTho we veiy we shou Id like to hear some good reason wr^y the"Government should nod have a preponderating inefcead of an equal share.