COMMONWEALTH LOAN

Dominion, Volume 21, Issue 7, 3 October 1927, Page 9

COMMONWEALTH LOAN

NEW YORK BANKERS’ PROTEST NOT GIVEN OPPORTUNITY TO BID FEES MIGHT HAVE BEEN REDUCED Some New York banking houses are dissatisfied because they were not given an opportunity to bid for the last Commonwealth loan, and have intimated that better terms might have been obtained BY Telegraph.—Press association.— Copyright. New York, September 30. It is understood that so great has been the dissatisfaction in at least three banking houses here over the fact that thev were not given an opportunity to bid for the last Commonwealth loan that an informal protest has been sent to Messrs Bruce and Page and the Commonwealth Bank, Sydney, intimating that it would have been to the advantage of the Australian Commonwealth if its representative had conferred with several groups of influential bankers in order to obtain the best terms. The point is also made that if

this had been done a wider distribution of Australian securities would have resulted in the American market avoiding the congestion of such securities which occasionally occurred in London. Generally speaking, there is a wide agreement that the loan was a success and the return to the Commonwealth high; but it is insisted that various banking groups were so ready to compete for the honour of floating the first Loan Council issue in America that the usual underwriting and commission fees, totalling 4 per cent., would have been reduced to as low as 2 per cent. The bankers who are now complaining readily admit that the underwriters of the loan, under the pressure known to have existed in the market at the time, probably also reduced their fees to the lowest possible level, thus showing that the loan was secured at excellent terms for the Commonwealth; but nevertheless thev express a belief.that the fees totalled 'at least 2) per cent., representing | per cent, more than, what the monev could have been obtained for.

Banking circles agree that the underwriters who floated the loan are of the highest ,reputation, and the Commonwealth position is strengthened thereby; but thev point out that other bankers who desired to bid were also of excellent standing, and intimate that the financial arrangements existing, between the Commonwealth Bank and its affiliations in America tend to throw Australian flotations to one group here, without offering other houses the opportunitv of competitive bidding, the latter being considered essential to assure the best' rates and widest distribution of bonds.