HUGE LOSS

Evening Star, Issue 25635, 8 November 1945, Page 4

HUGE LOSS

SHAREHOLDERS OF BIZ. PRICE FIXED 25/- SHORT OF VALUES INDEPENDENT VALUATION SOUGHT (P.A.) WELLINGTON, Nov. 8. The shareholders’ committee of the Bank of New Zealand, in an interview with the Prime Minister and the Minister of Finance, renewed their protest against the nationalisation of the hank. They urged! further that, if the Government was determined to persist in that policy, then it should do so in a way which would avoid hardship and injustice to the shareholders. The committee pointed out that the proposals contained in the present Bill, if persisted in, would inflict a huge and unjustifiable loss on the shareholders. It contended that the Government had no right by the Bill to fix arbitrarily a price which was far below the real value of the shares, but that the Government should follow the usual precedent of referring the matter to an independent tribunal, as had been , done in the past in cases of compulsory acquisition by the State of the property of private citizens. . It pointed out that, while the Bill provided that the shareholders : were 4o be compelled to accept a . basic cash price of £2 5s for their shares, independent advice that the committee had secured ‘ indicated that these shares were worth at least £3 10s. The committee did not ask the Government to accept their figure without inquiry, but to refer the matter to a competent tribunal, when the committee felt confident that their price could he substantiated. It was also pointed out that many shareholders ha'd actually paid over £3 for their shares. The committee urged strongly that Mr Nash’s stated objective of preserving the shareholders’ income was not met by the (proposals in the Bill. In the first place, the price he had fixed was based on.maintenance of the present reduced income arising from reduced dividends caused by war conditions, and the Minister had disregarded entirely the average income received by shareholders over a period of years. The Minister’s proposals for making available certain Government stock free of tax in the hands of the shareholders for the stated reason of maintaining the shareholders’ income only lasted for a period of 12 years. 20 yEAR PERIOD FAIR.

This was grossly unfair, and iff shareholder were to have their income maintained, as the Minister claimed h'e was doing, there was no 'justification for adopting the short period of 12 years only. The Chancellor of tho Exchequer in Britain had recognised a 20-year period for _ both purposes in dealing with the privately-owned shares in the Bank of-England. The Chanoellor, in fixing the price to be paid to the private shareholders, had adopted the average income received by .them over the preceding 20 years, and had also adopted the course of maintaining that income for the next 20 years after the State acquired their shares. Mr Nash, on tho otlior hand, had adopted to-day’s present reduced income, and proposed to maintain that for a period of 12 years only. The Shareholders’ Committee stated that it believed—and -the information available to it adequately supported the belielf—that if the Government’s proposals were proceeded with in theit present form, the shareholders would have inflicted on them a capital loss of not less than £4,500,000. This they regarded as nothing more nor less than confiscation by the State, of private citizens’ money to that amount. In tho course of the interview, Mr Fraser and 1 Mr Nash both agreed fully and unreservedly with the committee’s contention that the discussions which had taken place prior to the introduction of the Bill, m which the directors of tho hank had taken part, were not to be regarded as in any may binding on the committee or the shareholders, as the committee had nothing whatever to do with those discussions. In conclusion the committee adds that the Prime Minister stated that the shareholders’ directors had made it plain that they did not approve of what the Government was doing, and they did not compromise the committee in any way.