BANK OF N.Z.

Greymouth Evening Star, 12 June 1936, Page 12

BANK OF N.Z.

ANNUAL MEETING

[SPECIAL TO “STAR,”]

WELLINGTON, June 12. The annual meeting of the Bank of New Zealand was held to-day, Sir George Elliot presiding. In the course of his address, aftei referring to the balance sheet, the directors and staff, he said: At the General Elections in November last, the Coalition Government was overwhelmingly defeated, a large majority of the constituencies returning Labour members; and for the first time in the history of. New Zea.land. a Labour Government is in office. The Government has already taken steps to implement by legislation its election platform, and the “Reserve Bank of New Zealand Amendment Act” has been passed giving to that institution (now made 'a State Bank) full control over the credit and currency of New- Zealand. A “Primary Products Marketing Act has also’ been passed, giving the Government control over the Dominion s exports, though its guaranteed pi ices and marketing proposals are to be applied at present only to dairy produce. Some of the legislation directly affects the Trading Banks. For instance, they are to lose from August 1 next, the handling of the exports of dairy produce, and should wool and meat come, under the Government’s guaranteed price and keting scheme, the effect would be that the Banks would be entirely deprived of the normal means of replenishment of their London funds and would have to purchase all their exchange requirements from the Reserve Bank of New Zealand. I need hardly say that the Governments proposals in this direction will seriously affect an important branch or the Trading Banks’ business, a business they have developed and carried on since the earliest days of banking in New Zealand. PRODUCE MARKETING Hon. W. Nash, Minister of Finance, who is also Minister of Marketing, is hopeful of securing a market for all New Zealand’s surplus dairy produce by reciprocal agreements with Biitain and other countries. He is shortIv to proceed to London with this object in view, and his efforts to expand New Zealand’s markets will most certainly have the sympathetic support and goodwill of the public. One effect of the measure will be that, as from August 1 next, the financing of all dairy produce exported from New Zealand will be undertaken by the Reserve Bank of New .Zealand on behalf of the New Zealand Government instead ot by the Trading Banks on account ot the Dairy Companies as in the past. Ine Trading Banks have played an important part in financing and developing the dairy industry from the inception of the co-operative scheme in New Zealand, and it is not too much to say that but for the assistance given by the Banks, the dairy factories as a whole would not be in the flourishing position they are to-day. In view of the services rendered to the dairy industry, it is to be regretted that the Government, in framing its proposals, has decided to take away from the Trading Banks an important portion of dairy produce finance which m the past has been handled by them with satisfaction and at a modest profit. The loss of the London exchange in connection with exports of this produce will make unprofitable the working of some of our branches, the existence of which has only been justified because of dairy factory connections. TRADING AND BANKING. The trade figures disclose a sound position. The values of both exports and imports are higher by approximately £4,000,000 sterling, the excess of exports, viz., £9,828,000 sterling, being sufficient to meet all oversea’ interest commitments. The average total Trading Bank deposits for the March quarter amounted to £O5 599,000, an increase of approximately £4,500,000 as compared with the March quarter of the previous year. Free deposits account for £3,229,000 of this increase. Advances show an increase of £2,028,000 for the same period. The total Trading Banks’ balances with the Reserve Bank at March 30 amounted to £8,937,618, or say £5,600,000 in excess of the statutory balance required to be deposited. In addition, they held in London assets in connection with their New Zealand business aggregating the sum of £14,143,369 (N.Z.). The Trading Banks are, therefore, in a position to materially extend' their lending operations in New Zealand. The London funds of the Reserve Bank of New Zealand and the funds of the Trading Banks held in London relative to their New Zealand business, together amount to over £38,000,000 in New Zealand currency—a position of considerable strength. GOVERNMENT ASSISTANCE. I have heard many public speakers telling their audiences of the great service rendered by the Government to the Bank, and I agree with most of their statements, but I have never heard' one tell his audience what the Government received for that service. May I remind you of it. The Government now holds £500,000 in A preference shares, carrying a fixed preferential but non-cumulative dividend of 10 per cent., £ 1,375,000 in B preference, shares, and £234,375 in C .long-term mortgage shares. The A and B preference shares rank for capital before the ordinary shares, and would also participate in any surplus assets. For these 2,109,375 shares, the Government paid £1,859,375. To-day on a 4 per cent, return basis they are worth, on present dividends, £4,100,000 It will be seen then, that for this guarantee, against a high-class security, the Government has done exceedingly well. Furthermore, over the years, the Government has received' an average of 10J per cent, per annum by way of dividends on its investment in Bank of New’ Zealand shares. Following the Government’s assistance to the Bank a change was made in the constitution of the Board. The Government, although the owner of only one-third of the capital of the Bank, has the right to appoint four directors, while the private shareholders, owning twothirds, have the right to elect only two. I want you to understand that I do not suggest for one moment thht the Government of the day was overpaid for the service it rendered to the Bank. Although the guarantee was primarily given more for the welfare of the country than for the Bank, the Bank derived benefit, and for this the Government was entitled to some compensation. I am glad it has reaped such a bountiful harvest, but I am sure that the most optimistic per-

son sitting round the table on that fateful night in 1894 never dreamed that, as a consequence of the arrangement entered into, the countij would benefit so remarkably. From time to time New Zealand Governments have guaranteed the repayment of funds borrowed in London by local bodies, naturally without looking for specific rewards, but never did they enter into a guarantee that did more for the financial well-being of the Dominion as a whole, nor one that has been more remunerative to the country than that entered into with the Bank of New Zealand.

Mr. Watson, at the last annual meeting, drew, attention to the fact that a strong financial institution must be of great value to any country. If this Bank had not, over many years, built up strong reserves, it could not have carried on the business of the country so smoothly, nor would it have emerged from the depression (through which, happily, we seem to be passing) in the strong financial position we find it holds to-day. It gives.me great pleasure to be able to say that during the years I have been a Director of the Bank, to the best of my knowledge and belief, no customer has been harshly treated. On the other hand, any client finding himself in financial difficulties, and showing a readiness to help himself, has ever received the most sympathetic consideration. Further progress towards economic recovery has been made during the year. Trade has been more active. The yield from Sales Tax shows an increase of 13.7 per cent, over the previous year. Building activity is greater. Unemployment figures have been reduced. On provisional figures, the Dominion internal revenue for the y-sar was £26,170,000 (exceeding estimates by £430,000), and expenditure £25,900,000, giving a surplus of £270,000. In conclusion, may I emphasise, by no means for the first time, the urgent necessity of facing the fact that for New Zealand the United Kingdom is practically its only market. If due regard is paid to the manifest advantages pertaining to a closer reciprocal trade relationship with the Mother Country, and if that reciprocal trade relationship is wisely fostered, New Zealand, with its genial climate and fertile soil, should find' that gen-j eral prosperity is not unattainable. I now beg to move that the report and balance-sheet be adopted. Mr. Gibbs seconded the motion. TRIBUTES TO STAFF.

[per press association.] WELLINGTON, June 12. At. the Bank of New Zealand annual meeting, the motion for the adoption of the annual report was unanimously adopted. , . Mr. C. J. C. Harcourt said the Chairman had covered the ground very fully. but he thought the remarks Mr. Paterson made in regard to the London staff, applied equally to the New Zealand staff, and that not only the shareholders and banks’ customers, but the public generally, were quite satisfied with the way in which they had been met by the staff. The Chairman thanked the snareholders for the vote of thanks they had passed to the directors. It was pleasant to receive the appreciation or shareholders of the efforts of the directors and staff. Thanks were also returned by Mr. Dawson. General Manager. . He was sure that the staff would stand by the Bank at all times. The managers had had a most difficult time during the past few years, and he thought they had carried out their duties exceedingly well. From time to time, he received letters from the Banks customers voicing appreciation of the services of the staff. , Mr. William Watson, shareholders director, returned thanks foi i e-elec-tion. ..