BANKING LEGISLATION.

Hastings Standard, Issue 170, 13 November 1896, Page 2

BANKING LEGISLATION.

A QUEENSLAND BANK IN TROUBLE. THE COMMISSIONERS' REPORT. Brisbane, Nov. 12. The first official cerning the conclusion of the tabors of the Queensland National Bank Commission was contained in an announcement made in the House by the Premier that he intended to ask the House to pass a bill of an urgent nature through all its stages. It is understood that the bill will seek to temporarily guarantee the current deposits of the bank. The Premier hopes to be able to present the Commissioners' report on Thursday, and this, it is understood, will be followed by a second bill affording permanent relief to the bank. This day. In the report of the Commissioners on the Queensland National Bank, laid on the table of the Assembly last night, the estimate of the Bank's position is that liabilities exceed assets by £2,465,000 —that is to say, the whole of the paid-up capital amounting to £899,000, the profit and loss credit of £46,900, the contingency account of £160,000, and interest and suspense account of ±'75,000, amounting in all to £1,180,900 has been lost, and there is still a deficit of £1,252,000. In addition to this the Commissioners find that since the reconstruction of the bank in 1893 the sum of £747,000 has been written off as bad. Practically the whole of the loss has arisen out of transactions of old standing. The estimate of values has been made on a basis that assets should be realised judiciously and not by forced sales. The Commissioners say that in the course of investigation they passed many accounts at face value, which were, nevertheless, not returning interest on suspense account, or else not charged at all. T herefore it follows that profits shown were to some extent fictitious. The members of the Commission were decidedly of opinion that no dividends should have been paid since the reconstruction of the bank, but were not now in a position to state when and to what extent dividends paid prior to that period ceased to be justifiable. The provision made for losses since the formation of the Bank were inadequate, but the institution, notwithstanding the heavy losses sustained, had still a good volume of sound and profitable business, and this, under careful management, should enable the creditors to realise ; but the Commissioners consider the rate of interest allowed on deferred deposits should be reduced if possible to 2i per cent., otherwise the margin between revenue and expenditure would not permit of any substantial annual proportion being placed towards restoring the stability of the bank. The Commissioners estimate that even on the reduced assets the Bank can pay its expenses and 2A- per cent, to its depositors, provide for current banking risks, and yet pay an annual surplus of say £IOO,OOO. This is, they say, taking the business as it stands, without allowing for any improvements in values or cxpansiou in the volume of trade. The deficit so far as the creditors are concerned is a million and a quarter sterling, but under ordinary favorable circumstances this should be extinguished within a period of twelve or fourteen years. The Committee stated they had no desire to forge the official link between the State and the Bank, but pending the completion of fresh arrangements, they certainly think the Government should be represented on the Board of Directors. Creditors who have had to accept extended receipts for their deposits should also be represented on the Board. The Committee, notwithstanding a strong aversion to any form of State guarantee, recommend that the Government guarantee teuiporaril balances at credit of current accounts, and also such of new fixed deposits as may mature during the same period. The Government is a preferential creditor ; and, in view of this fact, the committee are of opinion that the best course for the depositors is as lows :—Private holders and those hairing deferred deposits receipts to take should convert the receipts into shares ; in other words, they recommend that they obtain the consent of the shareholders to replace them as the proprietors oi the Bank, but the shareholders are legally in possession of 100 000 shares, on which there is a liability of £2 per share. If the shareholders will surrender what may be termed their equity of redemption to depositors in consideration of being relieved of this liability the Committee reflom-

CABLES.

mend the C en .it and depositors to grant a r 1 i Under the proposed arrsi the position of the new batik 1 roughly Assets. £6,700,000; liabilities i; 1.005 .<«*>. The debate lasted several hours, and the second reading was carried by ■'>'> to 6. In Committee, Mr Nelson, the Premierj iid in consequence of the opposition to the inclusion of fixed deposits in the guarantee he moved that tbe provision to guarantee fixed deposits be cxprnitr- I. This was agreed to. The labor members also suggested that the guarantee be for a fixed term instead of being terminable at three months' notice. The Premier agreed to amend the clause to provide that the guarantee should extend c<> twelve months only. The Biil was p«>sed through Committee shortly after midnight, was read a third time, and transmitted to the Legislative Council, ivhich had been waiting for the measure since the afternoon. The Bill was then put through its stages in a few minutes.