Budget May Encourage Trustee Bank Formation

Press, Volume CII, Issue 30178, 9 July 1963, Page 14

Budget May Encourage Trustee Bank Formation

I Prom Uur Parliamentary Reporter)

WELLINGTON, July 8.

The formation of trustee savings banks is expected to be encouraged in the Budget, which will be presented by the Minister of Finance (Mr Lake) on Thursday night.

The Government is known to favour the establishment of such banks as a means of using smaller savings accounts to finance the work of local authorities. Financial advisers have been impressed at the increase of depositors’ funds at trustee banks over the last few years.

On March 31 of this year, the total 1 amount standing to depositors at the eight New Zealand trustee banks then operating was £91,959,000. Deposits in this type of bank more than doubled in seven years.

Deposits in the Post Office Savings Bank rose from £220.2 million on March 31, 1956, to £338.6 million at the end of the last financial year —a percentage gain of 50. The trustee savings bank movement started in Scotland in 1810. The first trustee bank in New Zealand was established in Wellington in 1846, some 20 years before the Post Office Savings Bank began. By 1870 there were nine, but four (in Lyttelton. Wellington, Napier and Nelson) did not survive the burn of the century. The five remaining banks (Auckland 1847, New Plymouth 1850, Dunedin 1864, Southland 1864, and Hokitika 1866) have grown in strength, and have become an important factor in the economic structure of the country—but for 93 years no attempt was made to add to their number.

In the last four years, however, the number of trustee savings banks either in operation or approved in principle has doubled. The Waikato bank, approved by the Labour Government, began operations in Hamilton in June, 1959. By the end of its first year, the amount to the credit of its

depositors had reached £1 million, and in June, 1961. the £2 million mark was passed. The Canterbury Trustee Savings Bank began in June of last year, and was even quicker in attracting depositors’ funds. Last September the Hawke’s Bay bank was launched, and is reported to be doing well. The Gazette last week gave authorisation for the first meeting of directors of the Manawatu Trustee Savings Bank. Last week also, the former Mayor of Wanganui. Mr E. A. Millward, was advised that the Cabinet had approved in principle the formation of a trustee savings bank in Wanganui. The legislation dealing with trustee savings banks is contained chiefly in the Trustee Savings Bank Act of 1948, a

consolidation of previous enactments. An amending act of 1957 permits the establishment of new ,banks by order* in-council, and also removed the stipulation that no branch office or agency could be established more than 25 miles from the head office of the existing bank. Further legislation has liberalised the policy on investments, and has authorised trustee savings banks to accept investments on terms similar to those of the Post Office Savings Bank, by way of deposits in home lay-by or investments accounts.

Several other applications by local interests for the establishment of trustee savings banks are under investigation, and it is believed that at least three of these may be in operation before the end of this year.