BANKS' RESERVE CAPITAL.

Evening Post, Volume CXI, Issue 41, 18 February 1931, Page 12

BANKS' RESERVE CAPITAL.

What is the reserve capital of (he banks in Australia and New Zealand? The question was asked of the '"Sydney Bulletin" and the following answer was given:— Reserve capital is not in the hands of the banks, and can be called up from the shareholders only in the event of liquidation; that is, it is for the fiual protection of depositors' and other creditors, and meantime is to be left where the misfortunes of the bank cannot touch it. Reserve funds are made up of (1) undivided profits, and (2) premiums on new shan; issues. Except in very rare cases they are not invested separately but are used in the business, being lent on ovcrdrail, etc. At its last balance the great Bank of New South Wales had £6,150,000 of reserve funds, besides £335,077 of unappropriated profits. Yet all the coin and bullion it had, according to the last quarterly averages, was £201,806, along with £2,683,941 of notes and cash at the Commonwealth Bank; this was all the_ unused money it had among upwards of 550 branches. And at that time it owed £35,299,116 on deposit, over 11 mJKious of it at call. [The reserve liability position was outlined in this column on 17th January, 1931.] "Of the overseas markets. New Zealand and South Africa both continue to show activity, while a fair business has been done for India considering the stale of that market." —From "The Draper," London, -