LENDING TO GOVT.

Press, Volume CIII, Issue 30472, 20 June 1964, Page 18

LENDING TO GOVT.

5% Rate Denied

A denial that the trading banks were lending money to the Government at 5 per cent was made by the research director of the New Zealand Bankers’ Association (Mr J. W. Rowe). Mr Rowe was replying to a statement by the Leader of the Opposition (Mr A. H. Nordmeyer) in the House of Representatives on Wednesday. As reported in "The Press,” Mr Nordmeyer said the Government was receiving money from the Post Office Savings Bank at 3) per cent, but from the trading banks at 5 per cent.

“Surely Mr Nordmeyer knows that the trading banks have not been allowed to increase their holdings of Government stock for over 10 years,” Mr Rowe said. “So how can the Government be *receiving money from the trading banks’? “Furthermore, as Mr Nordmeyer knows, when trading bank savings, banks are established they will receive only 3} per cent on their 70 per cent compulsory investment in Government stock—a rate comparable with that now being paid to the Post Office Savings Bank,” Mr Rowe said.

Shown Mr Rowe's statement Mr Nordmeyer said in Wellington. “I made no reference to the Government borrowing from the trading banks at 5 per cent or any other rate. “What I Said was that the Post Office Savings Bank savings are ‘made available to the Government at the relatively low Interest rate of 3} per cent, compared with the 5 per cent it pays for most of its finance-* “I am well aware of the fact that the trading banks have not been permitted for many years to subscribe directly to Government loans.”