BANK OF N.Z.

Press, Volume LX, Issue 18182, 19 September 1924, Page 8

BANK OF N.Z.

NEW CAPITAL AT PAR. SECRET WELL KEPT. (spkcial to "tub psass.") WELLINGTON, September 18. Shareholders in the Bank of New Zealand have been informed by a circular letter to-day that with a view to assisting the Government in its efforts to finance farmers who are at present protected under the Mortgages Extension Act the Bank has arranged to issue the balance (£1,125.000) of its authorised capital, and with the amount to take up, for the use of the Advances Department, a Government loan with a currency of ten years, and bearing interest at the rate of per cent, per annum. The issue of capital will be made at par on April Ist next, and, so far as the ordinary shareholders are concerned, in the proportion of one new share to four existing shares. The Government, under the Bank of New Zealand Act of 1920, will receive one-third of the whole issue. Further information concerning the issuo will be conveyed to shareholders when the necessary formalities have been complied with. The denomination of the shares of the Bank of New Zealand is £1 each. Formerly they were £lO each, but the denomination was altered in accordance with the policy of the directors to "democratise" the holding, that is, to make the share of as low a denomination as possible in order to spread them among a large number of investors, some of whom, it was presumed, would be people of slender means. It is understood that this object has been achieved. Among tho present shareholders of the Bank are servant girls and labouring men who have thought it wise, instead of spending their earnings, to invest them in the Bank of New Zealand. Course of Recent Sales. Evidently as a result of the announcement made by Mr Massey in the House of Representatives last evening, sales of Bank of New Zealand shares were made on the Wellington Stock Exchange to-day at £3. Sales made on the Dunedin Stock Exchange yesterday were at £2 16s 9d, and on the Wellington Stock Exchange yesterday £2 17s. Sales recorded by the Wellington Stock Exchange daring June last ranged from £2 12a 6d to £2 13s, during July from £2 12s 6d (ex dividend) to £2 15s 6d, and during August from £2 15s 6d to £2 17s. During September, so far as it has gone, they have stood at about £2 17s.

Apparently the secret of the new issue of capital was very well kept, for it came as a surprise as much to the shareholders as to tho public. A labour Member's Question. In the House this afternoon Mr Langstone, Labour member for Waimarino, gave notice to ask the Minister of Finance whether he would withhold giving liia consent to the Bank to issue £1,125,000 of shares at par to existing shareholders. By way of a note l:e added that in 1920 1,125,000 shares of £1 each were given to shareholders free, which were worth £2 16s 9d in the market to-day. In 1923 1,125,000 shares were issued to shareholders at the par value of £l, and these to-day were worth £2 16s 9d, which was more than a 20 per cent, dividend. If the new issue was at par the people of New Zealand would return to Bank shareholders the £1,125,000 which the State was borrowing, and the State would still be indebted to the Bank for the money. Mr Langstone was proceeding to comment when he was promptly pulled up by Mr Speaker. Mr Massey said he would answer the question in due course, but in order to prevent any misunderstanding he woulfl just like to mention that the hon. member appeared to be oblivious to tho fact that the State owned a large number of shares in the Bank.

Mr Langstone: I know that. Mr Massey: Then the hon. member is not candid, because he should have included that in his explanation. Mr Massey added that the Government was entitled to take 375,000 of the new shares at par, and he had arranged accordingly. Mr Langstone* That does not lessen the value of the shares.