BANK OF NEW ZEALAND

Press, Volume XLIX, Issue 14658, 6 May 1913, Page 7

BANK OF NEW ZEALAND

REPLY TO MR. WATSON

(SPECTAX- TO "THE PRESS.")

WELLINGTON, May 5. In connection with Mr William Watson's remarks regarding the proposed issue of new shares by the Bank of New /Sealand, the chairman of the Bank (Mr H. Beauchamp) says:—"Air Watson is indulging in side-stepping when he claims that owing to the Board of the Bank of Australasia being differently constituted to that of the Bank of iNew Zealand, the directors of the latter institution should not have the prerogative of indicating the terms and conditions 011 which the shares of that Bank should be issued. The phenomenal success of the Bank of JSow Zealand since its rehabilitation by, and direct connection with the State, emphasises the fact that its directors are just as competent Ito deal with its finances as the directors of banks who are elected by their shareholders. Indeed, if ono wished to point a moral and adorn a tale,' ono could give some interesting examples of the disasters which attended the Colonial Bank and the Bank of .New Zealand when they were controlled by shareholders only, but no good purpose can be served by referring to the unhappy past; wo have to deal with tno future. In mentioning an issue of shares by the Bank of New South Wales at par, Mr Watson is not quite ingenuous, inasmuch as he does not add I tho previous issues of shares by tnat Bank were made at a substantial premium. As to the action of the Gear Company some years ago in capitalising a portion of its reserve, I would point out that there is no relevancy between that company, a purely mercantile trading concern, and a bank. it is common knowledge amongst financial men that during the past twenty-hve years a great majority of banks and financial institutions throughout tho British Empire, in a position to do so, have invariably issued new shares at n premium determined by the earning power of each company, and the extent of its reserves and undivided proats. To my mind any proposition to otter new shares in such companies at par is not arguable."