THE BANK AGREEMENT. CONFIRMATION BY THE COLONIAL BANK SHAREHOLDERS. [BY TELEGRAPH.-PRESS ASSOCIATION] Dunedin, Bth November.

Evening Post, Volume L, Issue 114, 9 November 1895, Page 4

THE BANK AGREEMENT. CONFIRMATION BY THE COLONIAL BANK SHAREHOLDERS. [BY TELEGRAPH.-PRESS ASSOCIATION] Dunedin, Bth November.

An extraordinary general meeting of tbe shareholders of the Colonial Bank was held to-day. Eighty shareholders were present' tho directorate being represented by the Hon. G. M'Lean (Chairman), Hon W. H. Eeyaolda, Hou. W. D. Stewart, Mr. P. C. Neil, and the Hon. W. J. M Larnaoh. The Chairman said they had met to consider the agreement with the Bank of New Zealand for the sale of tho Bank's business to that institution, which agreement had reoeived tho sanction of Parliament. The contract did not give unmixed satisfaction to the directors, but it was the result of long, anxious, and tedious negotiations, and embodied the beßt terms they oonld prooure. One of the main conditions the directors had in view throughout the negotiations was that the shareholders should be released from all further liability on their shareß. Praotioally they were released from further liability. Every advance 'socount in the books had been thoroughly overhauled, from the largest to the smallest — first by the inspecting officers of the Bank of New Zealand, subsequently by the directors of that Bank, and finally by the Government Auditor. Ihe Bank of Now Zealand was to take over as good aaeets amounting to £2,195,884-, less allowance on furniture and stationery, and further had agreed to take over those in the " B " and " C " schedules, amounting to .£703,077, subjeot to realisation, against whioh it is to hold in hand -£327,305 of the purchase money. The total amount to be paid in the meantime by the Sank of New Zealand wonld be less .£2,509,284, the difference between theße amounts (£133,906) being available in oash. In due course the Colonial would also reoeive suoh portion of the -"327,305 as might not be required for deficiencies in aooounta in the " B" and " C" sohedules, and would also reoeive whatever amount was realised from the assets comprised in the " D" aohodulo. From the several sources they hoped for a substantial sum per share yet to be realised for distribution amongst shareholders, the amount of whioh will depend on the realisation of these aooonnts and the Btate of business in the colony until this had been done. As to the acquisition of the business, they had no doubt that its value to the Bank of New Zealand would be more than its direotors estimate. They seouro, next to their own, the largest exchange business in the oolonv, and the excellent advanoe business whioh they muoh required, and which in no other manner could they obtain in the present condition of the money market, exoepting by outting rates and taking accounts from the other banks They also got their most formidable rival out of the way. -here were obvious reasons wbioh had influenced the Colonial direotors in adopting the course whioh they hid. As indicating the radioal ohanges which have recently taken plaoe in banking in the colonieß, it mignt be stated that the dividends of other bankssome of them the oldest in Australasia—had during the last few years gone down to fully one-third of what they were, and the shares of those banks had been selling at considerably less than half the price ruling a few years ago. But for the intervention of the Government of New South Wales, the Australian banking crisis would have extended to New Zealand. During that period some of the Colonial shareholders, seeing the calls on shares that were being made, on financial institutions, in Australia ar.d here, and fearfnl of a like trouble coming to them, began pressing their shares on the market to such an extent that sales were made as low us 13s Gd-a. ciroumsta.nee that adversely affected the Bank's credit. This unsettled state of business, coupled with tbe withdrawal of deposits, occasioned great anxiety to the directors. As a consequence of that crisis, they had had deposits withdrawn to no less an amount than £522,000. Under these circumstances, pressing customers for money and calling it in from them weakened accounts which otherwise would have been oonsidered good, in addition to whioh the extraordinarily low price of all New Zealand produce placed some constituents in embarrassed circumstances who had hitherto been in satisfactory positions, and freedom from bad debts and de< preoiation in securities waa impossible, Were it not for the complete change that within the last few years had como over the system of banking, making it neoesaary tc rely more on paid-up oapital than on deposits, the direotors would not have considered it desirable to enter into the negotiations now under consideration. The outorj against parting with the institution wae chiefly traceable to those who had hitherto shown no sympathy with and had little 01 no interest in the Colonial Bank. He moved that the oontraot of sale and purohase, and the sale and pnrohase thereby contracted for, be ratified and confirmed. Mr. G. Arkle seconded the resolution. Mr. Keith Ramsay counselled shareholders to make the beßt of a bad business. The alternative wonld be a call —may be of £2 or £3 a share.. -He did not think a call, even if it were paid, wonld save the Bank. It was quite impossible, even if a call were paid up, to undo the serious mißohief that had been done to the Bank's oredit The Chairman and direotors had done what they thought would be beßt; at the same time, ho thought tbe whole thing a mistake. Mr. J. W. Bain said that at the meeting a, year ago the Chairman had given figures to show that the Bank was the strongest in the oolony, and from what was Baid it was a matter of surprise that they were there te consider the slate of the Bank. Could not the Bank have raised a million on guaranteed preference shares? The Chairman had given them some particulars about the £134,000, but he had not said when it waa proposed to pay that to the shareholders, or if it was to be paid in full at the rate of 13s 4d into whioh it is divisible, or to be paid in part. It was a most serums thing for the shareholders wnether they were to get anything in addition to the £134,000, or how much of that they were to get. In view of the contingent guarantees they might possibly not get 10s per share, lie wonld like a distinct statement from the Chairman as to what amount was to be paid to the shareholders, and as to when it was to be paid. Messrs. Arkle, R. Watson, and Captain Stewart also spoke, the last referring to an assurance he had received last year that the Bank had more monoy than it could do -with. The Chairman - So all havo more. Captain Stewart said the direotora were on the horns of a dilemma. 1 hey had been either incompetent or untrustworthy. The Hon. W. J. M. Larnaoh eaid he intended to vote against the sale. The Chairman ridiculed the idea of pre- * ferenee shares, and pointed to the faot in regard to the Australian Banka that suofa shares had only been taken up after tho doors were closed, and that they meant a heavy liability. After the caatigation he had received, it would be unfair to aek him to foretell anything more; but he could assure the shareholders that every precaution bad been taken, and be really believed there would be no further liability. Messrs. W. Barron, J. Green, and others asked a number of questions in referenoe to the possibility of further liability ; in reply to which tbe Chairman said the future liability he had mentioned was all the liability. They had an indemnity from the Bank of New Zealand to"pay all deposits. Of oourse there was a large amount of them that trent off at once. There was not the most remote possibility of any liability beyond the " C " shares, and he did not think there could be any fear. Besides, they had money coming from the "D" list. On the motion being put, three hands were . held up against it On a ballot being taken, the result was :— For the motion, 134,551; against, 6115. The- meeting, whioh laated nearly two hours, then olosed.