BANK OF NEW ZEALAND

Evening Post, Volume CV, Issue 142, 16 June 1923, Page 8

BANK OF NEW ZEALAND

THE INCREASE OF CAPITAL

WHO ARE THE SHAREHOLDERS?

The decision of the directors of the Bank of New Zealand to increase its capital was the subject of much discussion in the city yesterday, as soon as news was available after the meeting in the forenoon. The increasing interest of the investing public in the shares oE the bank showed that the announcement was not unexpected; all the same it seemed to come as a surprise to many who were present at the meeting. The bank has sent a circular to all shareholders, dated 15fch June, setting out what it is intended to do. In plain terms the Government is to be offered £375,000 qi preference shares at £1, and the shareholders £750.000 shares at £1. The Government has th.6 option of taking up one-third of the new capital, and is assured of a dividend of 10 per cent. Ie will have that dividend no matter what dividend, or if no dividend is paid to ordinary shareholders. Formally, the one-third of new capital will be ojfered to "His Majesty tho King," and no doubt he will take up his proportion,

The Government already has £1,125,----000 invested in the bank, and the shares are preference shares. The ordinary shareholders have £2,250,000 invested in |he institution. Of the six directors of the bank the Government appointees number four. There is also held £529,----988 guaranteed stock on which 4 per cent, is being paid. The bank is authorised to bring its capital up to £6,* 154,983. Already £3,504,988 in guaranteed stock. Government and^ ordinary shares has been paid up. By~ the addition of new capital the holding in preference and ordinary shares with the guaranteed stock, will be increased to £5,029,988.

DEMAND FOR CAPITAL.

The new money is wanted for the expanding business of the bank and the general demand for more capital for farming, manufacturing, and commercial purposes.

A point that ought not to need indication, but is the cause of much misunderstanding, is the difference between the issue price and market price of a share. The Bank of New Zealand ordinary shares, for instance, bought at £3, omitting commission and other charges connected with the sale of shares, would return to tho investor under 4g pel' cent., notwithstanding that the last dividend was 2s 8d par £1 share. Officially the bank is unconcerned with the market price of its shfirog. The shares are the property of shareholders and at their disposal, to have mid to hold, to sell or hypothecate, as they please. Shareholders are not going to receive the further issue of 750,003 shares for nothing. They will require to pa-y £1 each for them, and for. every three they hold they will be entitled to buy one further share ni that price. If they do not wish to buy, or cannot buy, into the new cyve tley will be abfe for a consideration to sell to others the right to buy. information on the subject is not obtainable, nor is the Bank of New Zealand likely to furnish it, but since the "democratising of the shares" (as tho late chairman. Sir Harold Beauchamp, described it), the making of the £10 .shares into shares of £1 has resulted in a wider spreading of the shareholding than ever before among people of quite .moderate means. Many of them may be in the evening of life.

THE "SMALL" SHAREHOLDER,

A meeting of the shareholders of the Bank of New Zealand is rather different from a meeting of some of the great banking institutions in London, where a few, sometimes under twenty, obviously well-to-do and often titled, people will attend in a quiet and quite small board-room to listen to a brief formal speech and the comforting announcement that cheques for the dividends will be available at the close of the meeting, or be posted that evening. Shareholders in .the Bank of New Zealand probably include superannuated officials, mariners who for years hav 6 taken.ships in and out of intricate bar harbours in dirty weather, policemen who, in their time, _ patrolled streets in the dead of the night, and domestic servants, for all one can know to the contrary, who have been industrious and saving, and see the years that fail coming upon them, many have put a few pounds into Bank of New Zealand shares; and, of course, there is the money of widows and orphans invested in 'the bank, provision made by a breadwinner while he had the opportunity. Any mental picture that might be drawn of a list of shareholders of the- Bank of New Zealand consisting entirely of wealthy people would be hopelessly out of drawing and falsa in colour and values.