Australian Government Buying Bank Shares: Heavy Dealings Reported

Evening Star, Issue 26185, 21 August 1947, Page 7

Australian Government Buying Bank Shares: Heavy Dealings Reported

(Rec. 1 p.m.) SYDNEY, August 20. The decision of the Federal Government to buy all bank shares offered on the stock exchanges at prices ruling last Friday, has resulted in the biggest wave of bank share selling for years. It commenced yesterday afternoon after a slow start, and brokers indicate that it will, go on for several days.

Prices rose to and steadied near the levels ruling last Friday as the brokers acting for the Commonwealth absorbed all shares offered on or below the basic price. Purchases were not made on behalf of the GoveriuuMt when a private buyer was prepared to bid higher. At the close of business yesterday nearly 13.000. bank shares,. valued at £20,000. were sold on the .Sydney and Melbourne stock exchanges. Sydney sales alone totalled £13.000. • . At Brisbane there was a demand for all bank shares, but'the only sales were National (£1 paid) at 31s 6d. A similar position occurred in Adelaide, where the demand was keen, but few shares changed hands. There were no sellers in Hobart. The lessons for the heavy dealings in Commonwealth bonds are believed to lie the prospect of the raising o’f Joans for the financing of the big works programmes contemplated by* the- Commonwealth and the States and the assumption that if bank shareholders are compensated 1 by payment ,in bonds under the national plan more large bond issues will come on the market.

Brbkers consider that the Government action will be effective in stabilising the market for bank shares as long as it continues, but some brokers de- ; clare that the Government was at fault in the first place ;by making its nationalisation announcement and leaving investors in the air about the pro-, posed basis of compensation. Some brokers maintain that the Government i£ now profiting by the nervousness of some investors to acquire bank shares below the real value of their assets backing and what was hoped would be just terms under the constitution. It is learned that several banks have power under their Articles of Association to decide the suitability of their proprietors. Among them are the Bank of New South Wales and the Union Bank. - Though this power has seldom, if ever, been exercised, it is suggested that the banks would bo entitled in the circumstances to refuse to accept the Commonwealth Bank as a nominee for Commonwealth Government as a shareholder.