COLONIAL BANK.

Press, Volume LII, Issue 9272, 25 November 1895, Page 2

COLONIAL BANK.

EXTRAORDINARY GENERAL

MEETING,

(PRBSS ASSOCIATION TELEGRAM.) DUNEDIN, November 8.

An extraordinary general meeting of the shareholders of the Colonial Bank was held to-day. Eighty shareholders were present, the Directors being represented by the Hon. G. McLean (Chairman), the Hon. W. H. Reynolds, the Hon. W. D. Stewart, Mr P. C. Neill and the Hon. W. J. M. Larnach.

The Chairman, in the course of hi* speech, said—" We have met to consider the agreement with the Bank of New Zealand for the sale of the Bank's business to that institution, which agreement iias received ithe sanction of Parliament. The conuaofc s one that does not give unmixed satisfaction to your Directors, but it is the result of long, anxious and tedious negotiations, and embodies the best terms they could procure for you. It only remains for you now to say whether you will accept or reject it. Oα reference to the agreement you will see that, with the exception of the " C" list of accounts, which have very liberal reserves by way of security placed against them, consequently no great liability should attach to them, and the ordinary drafts and remittances which have to run oif, and on which the risk of any liability is remove, the purchasing Bank guarantees to pay all deposits aud other liabilities, so that practically the shareholders are released from further liability." Ths Chairman went on to detail the leading features of the agreement based on the balance sheet " as at the 31et of August. The general advances had been subjected to the most searching investigation possible. Every advance account in our books has been thoroughly overhauled from the largest to smallest, first by the inspecting officers of the Bank of New Zealand, subsequently by the Direotors of that Bank, and finally by the Government Auditor. The result of thie investigation was that the accounts were classified under four headings. Those in the "A" schedule, amounting to £927,197, were taken over unreservedly ; those in the "B" and "C" schedules, amounting to £703,077, the Directors of the Bank of New Zealand wished to further investigate, and pending more experience of their working, insist upon retaining the sum of £327,305 in reserve by way of security. Here I may say that many of these account* have uot given us anxiety, while some of them are as operative and profitable as any in the books of the Bank. ' The assets comprised in the "D" schedule include certain inoperative accounts, and amount nominally to £102,274, which assets are retained by this Bank for realisation. It will be seen, therefore, that the Bank of New Zealand is to taka over as good, inclusive of the " A " schedule, assets amounting to £2,195,834, less allo tfanco on furniture and stationery, and further has agreed to take over those iv the "B" <tnd "C" schedules, amounting to £703,077, subject to realisation, against which it is to hold in hand £327,305 of the purchase money. The total amount to be paid to you in the meantime by the Bank of New Zealand will be £2,643,190. less £2,509,284; the difference between these amounts (£133,906) being available in cash. Iα due course we shall also receive such portion of the £327,205 as may not be required for deficiencies in accounts in the "B" and **C" schedules, and we shall also receive whatever amount is realised from the assets comprised in the *• D " schedule. From these several sources we hope for a substantial sum per share yet to bejjrealised for distribution amongst the shareholders, the amount of which v. ill depend on the realisation of those accounts and the state of business in the colony until this has been clone. There are obvions reasons which have influenced your Directors in adopting the course which they have. .... During that period—the banking crisis in Australia —some of our shareholders, seeing the calls on shares that were being made on financial institutions in Australia and here, and fearful of a like trouble coming to them, began pressing their shares on the market to such an extent that sales were made as low as 13s 6J, a circumstance that adversely affected our credit. This unsettled state of business, coupled with the withdrawal of deposits, occasioned great anxiety to your Directors. As a consequence of that crisis, we have had deposits withdrawn from ns to no less an amount than JE522 000, which naturally necessitated the restricting of our advance business, and compelled us to keep ourselves in a stronger position than we previously had considered it necessary to do. . . . . Pressing customers for money and calling it in from them weakened many accounts which otherwise would have been considered good, and the extraordinary low price of all New Zealand produce, prevailing at the same time, placed some constituents in embarrassed circumstances who had hitherto been in satisfactory positions, and freedom from bad debts and depreciation in oar securities wu impossible. Were it not for the complete change that since the Australian crisis, or within the last few years, has come over the system, making it necessary to rely more on paid-up capital than on deposits, the Directors would nos have considered it desirable to pursue the coarse they have done in entering into the negotiations now under consideration." After a few more remarks Mr McLean moved the following resolution :—"That the contract of sale and purchase having date the 12th day of October, 1895, executed by and between the Colonial Bank of New Zealand as the selling Bank, and the Bank of New Zealand as the purchasing Bank, and laid upon the table of each House of the General Assembly on the 18th day of October, 1895, and the sale and purchase thereby contracted for, be and tW* same are hereby ratified and confirmed." Mr G. Arkle seconded the resolution. Several shareholders spoke for and against the motion, and numerous questions were asked. The Chairman, in replying, said the future liability ho had mentioned was all the liability. They had an indemnity from the B«nk of New Zealand to pay all the deposits. Of course there was a large amount of them which went off at once. There was not the most remote possibility of any liability beyond What he had mentioned in his speech,

viz., in the " C " shares, and he did not think there con.d be any fear. Besides, they had money coining from the " I) M list. On the motion being put, three hands were held up agaiosfe it. Oα a ballot being taken the result was—For the motion 134.551, against it 6115. The meeting then closed.