BANK OF NEW ZEALAND.

Auckland Star, Volume XXV, Issue 237, 4 October 1894, Page 7

BANK OF NEW ZEALAND.

SPECIAL MEETING OF SHARE HOLDERS.

STATEMENT B* MR JOHN MURRAY,

ELECTION OF DIRECTORS,

Tho special genoral meeting of shareholders of the Bank of New Zealand, called for the purpose of electing five directors in terms of the Bank of New Zealand Share Guarantee Act, 1894, was held on Sopt. 26rh at Wellington. There were about 50 shareholders present, and 42,383 shares wore represented by proxy.

On the motion of Mr Martin Kennedy, Mr John Murray was voted to the chair.

Mr Murray said : This ia a special general meeting of shareholders called for a specific purpoao, viz., the election of five directors in place of the directors in London, who have just resigned. Under tho regulations imposed by the Bank's Deed of Settlement, no other business can be transacted to-day. I can well undtratand thab shareholders are anxious about their affairs, and desirous •to obtain information on various points, but 1 hope they will not take it amiss when I say that, besides thab this ia not the occasion, I am not tho person to speak of the internal affairs of the Bank. It would bo presumptuous in mo to do so. lam neither a director nor an official. I simply undertook, at fcbe instance of tho late Board, a special mission, which will be accomplished presently, when you have elected new directors. I will, however, with your permia>ion, say n few explauatory words rt^ariiiiin Loaibers which have baon the subject of my intervention, and as Co which f am, therefore, competent to speak. The mosD important of these are the new relations which havo boon established booween the | Government and the Bank. These are characterised by two features. One is the guarantee by the Suite of two millions of capita!, on which only 4 per cent, has to be paid. This so adds to the strength and stability of the Bank, and will by and by tend to add ho to its profit?, that it ia obviouo'y in tho intercuts of shareholders, and theroi'oro calls for no flirt her comment. Tho other is- tiia ri^lit and duty of the Government to tippoint a president and auditor. Some peopla any, and others protend to think, that thu Government will appoint to tlioso importanc offices prominent political tnon, supporters of thoir party, without due regard to ritues.?. I ffifcl confident; that the Government will belie any euch anticipation, and that the appointments when mario will be found creditable to the Government and the colony, and advantageous to your interests. Again, it has bean said, " the Government will mv this Bank ; it will be a political machine; the Government will know al! about customers' aflairs." This idea has, I think, bean mainly promulgated by persons antagonistically interested. It is entirely erroneous. The Government will know nothing more about the confidential affairs ot the Bank in future than it haß known in the past. The President, while representing the Governmenb and primarily safeguarding tli3 interests of the country, will bo an officer exclusively devoted to his duties and attached to tho Bank, and to that extent on official hdving its interests at heart. The auditor will be in the position of a bank inspector, with this difference—that he will not be responsible to the directors, nor hold his place at their discretion, and will therefore be uruler no temptation to bo subservient to them. Both officials will be under tlto^ usual honourable plodj/o of secrecy. They will not interfere with or hinder, but will rather promote the ordinary business of the Bank.

The President will only interfere with his .-veto to [ atop improper business. If, for instance, the directors were to help themselves or their friends to your money, or were to make ra«h and speculative advances ib would be his duty to stop such transactions, and if wo could conceive of his prohibition being disregarded ifc would next be incumbent on him to report bo the Colonial Treasurer, who would then apply to the Supreme Courti to restrain the directors. This is tho Bum and substance of what the Governraonfc can over do in oho way of interposition in the Bank's affairs, and it is certainly to your advantage that in case of need they should do bo much aa fchia. Another matter I have dealt with is thab of amalgamation with the Colonial Bank, so much canvassed lately. Aa this is, for the presenb at least, quite oft, ib may eeem superfluous to say anything about it. I may explain to shareholders bhab my chief motive in promoting this project was to add largely to the business, and, therefore, to the profitß of tho Bank, There has been much superficial and not a little hostile criticism of the provisional agreement which was arrivod ab. Some persons could nob be satisfied that bad business would not be taken over at your risk. Ib was impossible that 1 could guard against this more effectually than by stipulating that your directors should bo tho judge 3of what was to be taken and what rejected. Then ib was contended that the Bank of .New Zealand . was to be handed over to the Colonial Bank. Thi^ seemed to me to b8 negatived by the stipulation that your appointees should be preponderant on the joint Board. Finally, I coaie to the election of directors. Due notice was given, and ib was open to' any qualified shareholder to announce himself as a candidate. Six gentlemen gave the required notice. I had requests from shareholders at a distance bo bell them whom I recommended. 1 thereupon issued a circular of which you roceivod a copy, recommending bho five gentlemen whom I have named. I know these gentlemen and am well satisfied with their qualifications. In response bo my circular I have received proxies from colonial shareholders representing some 29,000 votes. I did not seek, nor do I hold, any proxies from English shareholders. Mr Murray concluded by proposing the election of Messrs W. Booth, ft], Kennedy, T. G. Macarbhy, Hon. W. W. Johnsbon, and R. H. Glyn as the new directors. The motion was seconded by Mr G. M. Kebbell. I

Mr Lodder (Wellington) proposed that the number of directors should bo incroaeed to eight.

The Chairman was afraid lhab notice would, have to bo given of such motion. There were only 50 or 60 shareholders present out of 2,200 in the Bank, and no such change as was proposed should be made without due notice to tho other shareholders.

Mr T. McKenzle (Wellington^) asked, to what exteut were shareholders liable to the Government? ■

The Chairman' replied that there was a reserved liability of £10. Mr Mackenzie thought shareholders had been roughly used, add had had little say in the mabtor. Tho two millions, it was said, was to be the salvation of the Bank, which must to his mind have been very strong to stand the knocking about it bad. He pointed out that in the past three cominiosioners had been appointed to inquire into the Bank's affaire, and it was understood that they had presented a favourable report, yet one of them had presented an inexplicable report, but that was only after he had secured himself. He thought the Government owed a debt of gratitude to tho Bank for assistance in the past, and declared that had it not been for such assistance the colony would have b6en bankrupt. The Bank in the old days was a very flourishing institute, paying high dividends, but all at once it went wrong. The Bank had formerly lent the Government an amounb almost equal to the full amounD of its capital, yet tho Government now came to them in tho most patronising manner. The shareholders had been true to. the interests of the colony, and were deserving of every consideration on the part of the Government. He thanked Mr Murray for hia last letter to the Government, and trusted that the Bank would, retain its former position, and thai)" 7 such success would be of a permanent character. Mr Blanchard (Wellington) thought it was due to shareholders that some explanation should be given of the circumstances which led up to the application to the Government for the £2,000,000 guarantee. •■; Shareholders should know whether there were any special losses which led to so large an amount as £300,000 being written off.

Mr Murray said the circumstances which led up to the application being made to the Governmont had already been published. He explained that the necessity arose from a fall in the profits; not so much of the Bank as the Eatatos Company. There had been a fall in prices, trade was bad, and in consequence the directors found themselves in tho position of being unable to declare a , dividend ; therefore the position was a serious one. As co tho other question, the affairs of the Banki, he reminded them, were not a very fit subject for discusuion at a public meeting. He did not propose to commie himself hastily bo anything which he had not had an opportunity of considering. Mr Blanchard thought the shareholders werß entitled to the information ; and, continuing, said be would have preferred to see some shareholder nominated who had something to lose, one who had put money inbe^tbe Bank in the old days, and wished to redeem to.

Mr C. W. Tanner (Wellington) was also of opinion thab shareholders should be made aware of the position. He cougraoulated Mr Murray as the only mun in New Zealand who could have obtained two millions guarantee from the Government;. Ho trusted they would soon see the Bank pay ing dividends out of income. .The books had formerly b6en examined and the business reported sound, and what he would like to know waH how much more was to be written off sliaros ? As to amalgamation having fallen through, he asked if a further call was to be made. He thought the publication of tho proposals for amalgamation before the decision of the Government was obtained was prejudicial to the interests of the Bank, and said there was a feeling among shareholders that.no one would be elected a director unless nominated by Air Murray.

Another shareholder suggested closing a number of branches which did nob pay.

Mr Murray, in roply said there were five bronchos in Australia, and all were paying. Tho genera! question of closing eomo branches had been already considered. It waa not that nil branches were nob paying, but thab they wero not paying enough, and he poinfcod out that (ho Bank could do twice the business without an- appreciable addition to the expense. As to the position in Which the Dank had drifted he said it was known thab in ]BSB ib could nob pay a dividend. A Committee was appointed, reports wero raade, and independent; valuations wore obtained. The Shareholders' Committee report, bo the effect fchab there was sufficiency of provision, was challenged and referrad to a Committee in London in no way responsible for tho administration in the past. Mr Mean lißd then been deputed to visib the colonies and make a full .report on the affairs of tho Bank. The shareholders of the Bunk of Now Zealand were nor. alone in pufloring from bad times, and he declared no bank in tho colonies had faced a position mieli as this Bank had on two occasions. Some of tho bunks in Australia Uus been in a very bad way, and calls had boon already mad a fchoro. -The position whs mainly duo to • depreciation in the fall of values, combined with taxation, It> had been asked why tho Government, if it bad no intention of agreeing

!to amalgamation, had allowed the details to be published. He said he believed tho Government were at first in ■ favour of the echeme. nnd tnar"sbme circumstance must have arisen to change their views. He was quite satisfied that in the' appointment of a President the Governmenfc would make a good selection.. Mr Murray explained why he had fixed on five as the number of directors :—l. Economy, as shareholders were nob anxious to pay for more than were necessary. 2. Thab his experience proved bhat in caßes where there were more than the required number of directors the work fell upon two or three, and the others were dummies: therefore ib was more in the interests of the shareholders to have good workers. If whab shareholders did to-day was not satisfactory a special meeting could be called to re-consider the number. As to Mr H. H. Glyn, he had asked him to stand in case amalgamation came off. He thought Mr Glyn was quite prepared bo resign if the shareholders wished it; the vacancy would then be tilled by the directors until the half-yearly meeting. In reply to a question he said the London directors had resigned. Mr John Ryley (Dunedin) thoughb^the discussion bad taken a wrong direction. They should nob go in for recrimination and faulb-h'nding, as those who had gob tho Bank into its position wore not here. Had the counsel of the Chairman (Mr Murray) been taken in the past the Bank would now be in a sound position. There were in tho old days, he said, directors who had helped themselves, and brought the Bank down. Circumstances had been operating which brought down values all round, and all must be prepared to meet that. With wise management the bank would regain its former position. He admired the statesmanship of the Government in connection with the guarantee. ' The Bauk had helped the Government, and the latter now reciprociated in assisting an institution which had so largely assisted the colony. The question nob only affected tho Bank, bub the whole colony. Had the Bank been compelled to close its doors, no one knows whab would have been the result. Speaking as to the directors nominated, he said the duty of shareholders was to ascertain the character and abilities of the gentlemen seeking the position. He had done that, and was prepared to support the names mentioned. One redeeming feature of the guarantee question was that the Government was to appoint the President and an auditor. He deprecated the new Board making a call, and pointed out thab a number of tho poorer shareholders were dependent upon their shares for a livelihood. A call should only be made as a lasb resource. Ho regretted the amalgamation scheme had nob been completed, as it would have resulted in a saving of a sum of £50,000 annually, and it would have boen a source of strength to the institution. Mr George Allen (Wellington), as one of the oldest shareholders in the Batik, said ho would like to see the'number of directors increased to seven, and asked if holders of new stock, who were guaranteed 4 per cent., wero liable to calls.

Mr Murray replied in the negative. The motion for the election of directors was then pub and carried unanimously, Mr Lodder's amendmenb finding no seconder.

The Hon. W. W. Johnston, in replying on behalf of himself and the other directors, said tho question as to their competency would shordy be put to the test. He declared their officers were fully determined not to intiict hardships on shareholders.

The meeting closed with a vote of thanks to Mr Murray.