BANKING TOPICS.

Auckland Star, Volume LVI, Issue 2, 3 January 1925, Page 5

BANKING TOPICS.

THE OVERDRAFT RATE. (By a Financial Correspondent.) The banks operating in Xew Zealand frequently come in for censure because j of their rates for overdrafts being in the opinion of some too high, and there ; are not a lew people who think that a State Bank would work wonders. It , would surprise these people to learn that the State Bank in Australia—the ; Commonwealth Bank —is about to j , charge 7 per cent. The Sydney "Daily | I Telegraph"" of a recent date says:— j ! "The Commonwealth Bank has decided j to raise its rate of interest on over- j drafts to 7 per cent. The higher rate : will take effect from January 1, 1925. It is the intention of the bank to con- ' tinue to allow a special concession on | accounts of charitahle institutions, | churches, and other bodies not trading j for profit." Since January 1 last the rate has i been O'J per cent. Previously li per cent had been maintained throughout the war and post-war period. For some time the Commonwealth i Bank overdraft rate has been below that charged by most other banks, and the revision will bring the rate more into line with the general quotation for bank advances. Few institutions are prepared now to afford accommodation to customers at less than 7 per cent. In odd instances tU per cent is still being charged, but, on the other hand, rates ranging up to 8 per cent have been asked. i The movement in the Commonwealth Bank rate is indicative that the local fin- I nncial position has not. become easier and will disappoint the hopes of those who had looked forward to an early return to less stringent monetary conditions. While the Commonwealth Bank was quoting a rate below that generally current, it had to adopt a policy of rationing credit. The board apparently has considered it advisable, by raising the rate to something like the true economic level, to lend its funds to those who are strongest and best able to pay. ! Increase of Capital During the \ear several banks and joint, slock companies increased their , capital either by the issue of new shares or by the capitalisation of rererves. The directors of the National Bank of New Zealand issued 100,000 new shares at £4 j i 10/ each, of which £2 10/ represented capital and £2 premium. This was made ' payable in three equal instalments on June 13, August 1 and September 27. ! Towards the end of July the share- j holders of the l'nion Bank of Australia pave their approval to an increa-e of the nominal capital by £1,500,000 to £1(1,500,000, and in November the bank issued 100,000 new shares at £11 each, of which £5 represented capital and Hi premium. The amount is payable in four equal instalments, the last being due on February 11. The Commercial Bank of Australia also increased its capital during the year, and the Bank of New Zealand announced an issue of 1,125,000 shares of £1 each to be made at the close of I the financial year on March 31. The entire proceeds is to be advanced to the Government at 5$ per cent interest. The directors of the Standard Insurance Company capitalised £50,000 cut of reserves by declaring a special bonus dividend of 5/ per snare, and sim_ltaneously making a call of 5/ per share. The New Zealand Guarantee Corporation issued 100,000 new shares of £1 each. 50,000 to the shareholders and 50.000 to the public at a premium of 1/ per share. No call of more than 2/ per share was to be made before December 1, 1024. The New Zealand Drug Company issued 50,000 new shares of £2 each at a premium of 10/ each. I By special resolution the directors ot I Howard Smith. Ltd., were authorised jto capitalise £500,000 of reserves by tiie I iss.ie of paid-up bonus shares to share- | holders. In January, 1024, at a special meeting, tiie shareholders of the Colonial Sugar Refining Company agreed to the nominal capital of the company being increased from £4,000,000 to £7,000.000 by the creation of 150,000 new shares of £20 ea.-h. The Gear Meat Preserving and Freezing Company, at its annual meeting early last month, distributed amongst shareholders by way of special dividend ■4_ per cent inscribed stock, tax free, in I the proportion of £1 face value of inscribed stock to each share in the ' company. As the Treasury will not subdivide the stock into 'multiples of lr-s than £10. balances below that figure arc paid in cash at £07 10/ per centum. This represents a distribution of inscribed stock of the face value of , £1(10,(100, «nd is about the biggest bonus' distribution ever made by a New Zea- j land joint stock company. I i