BANKS' RESERVE CAPITAL.

Auckland Star, Volume LXII, Issue 45, 23 February 1931, Page 4

BANKS' RESERVE CAPITAL.

What is the reserve capital of the banks in Australia and New Zealand. Ihe Question was asked of the "Sydney Bulletin, and the following answer was given:--Reserve capital is not in the hands of the banks, and can be called up from tne shareholders only in the event 01 liquida.tion; that ifl, it is for the final protection of depositors and other creditors, and meantime is to be left where the misfortunes of the bank cannot touch it. Reserve funds are made up of (1) undivided profits, and (2) premiums on new share issues. Except in very rare eases they arc not invested separately, but are used in the business, being lent on overdraft, etc. At its last balance the great Bank of New South Wales had £0,150,000 of reserve funda, besides £335,077 of unappropriated profits. Yet all the coin end bullion it had, according to the last quarterly averages, was £201,800, along with £2,083,041 of notes and cash at the Commonwealth Bank; this was all the unused money it had among upwards of 550 branches. And at that time it owed £35,209,110 on deposit, over 11 millions of it at .call.