BANK OF NEW ZEALAND.

New Zealand Herald, Volume XXV, Issue 9039, 27 April 1888, Page 6

BANK OF NEW ZEALAND.

HALF-YEARLY MEETING. Thus half-yearly meeting of the Bank of New Zealand was held in the bankinghouse, Queen-street, yesterday afternoon, the Hon. Sir Frederick Whitaker, president of the Board of Directors, in the chair. There was a large attendance of shareholders present, including the Rev. Shirley W. Baker, Messrs. Thomas Buddie, F. G. Ewington, H. Green, F. Cherry, A. K. Taylor, J. M. Clark, W. S. Wilson, W. W. Johnston (Wellington), Dr. Campbell, Mr. Justice Gillies, Messrs. A. G. Horton, John McLean (Otago), George Buckley (London), A. Boardman, A. O'Neill, and others.

Mr. John Murray, Inspector, read the advertisement calling the meeting and the minutes of the last half-yearly meeting. The following report and balance-sheet were taken as read :—

Fifty-third Report of the Directors of the Bank of New Zealand, to the Half-yearly General Meeting of the Proprietors, held at the Banking-house, Auckland, on Thursday, 26th April, ISSS. Tho result of the Half-year's operations is as follows :— Net Profit without appropriation for Bad and Doubtful Debts .. .. £64,765 0 1 To which has to be added— Balance from half-year ended 30th September. ISS7 6.106 8 2 Making a total of £60,861 8 3 Which it is proposed to appropriate as , follows :— To payment of Dividend at the rate of 7 per cent per annum £35,000 0 0 Balance carried forward 25.561 S 3 1 £60,861 8 S The Dividend will be payable at the Head Office, Auckland, to-day (Friday), the 27th instant, and at Branches on receipt of advice. , For the Board of Directors. Frkdk. Whitaker, Chairman. Aggregate Balance-sheet of the Bank of New Zealand, at 31st March, ISSS, including London Office at Slst January, IS3S. Dr. Liabilities. £ s. d. Capital paid-up 1,000,000 0 0 Reserve Fund 600,000 0 0 Notes in circulation 494.173 0 0 Bills Payable in circulation.. ... 1,308,300 1 10 Deposits and other Liabilities -. 11,156,607 IS 1 Balance of Profit and Loss .. .. 60.861 S 3 £11,520,447 S 2 Cr. ASSETS. £ s. d. Coin and Cash Balances at Bankers 2,274,014 0 7 Money on Short Call in London .. 15.i.400 0 0 Bullion on hand and in transit, .. 170,762 11 0 Government Securities .. .. 11,470 - 6 Bills Receivable and Securities in London 1,424,433 6 2 Bills Discounted, and other Debts due to the Bank 10,071,527 6 S Landed Property, Bank Premises, <fe c . .. . 373,795 1 3 £14,520,447 8 2 Profit and Loss Account. Dr. & 8- d. To Dividend on 100,000 Shares at £10 each, at rate of 7 per cent. per annum .. ■ - .. • • 85,000 0 0 Balance carried forward — *. 25,361 3 3 £60,361 8 3 Cr. * 8 " d* By balance from half-year ended 30th September, ISS7 .. .. 6,106 8 2 By Profit for half-year ended 31st 'March, 1888 S4-' OS 0 1 £60,861 8 3 Reserve Find. Dr. £ s. d. To balance - ~ - 600,000 0 0 Cr. £ S. d. By balance from last half-year .. 500,000 0 0 We hereby certify that we have examined the accounts of the Bank of New Zealand for the halfyear ended 31st March, 1338, and that we have counted the cash balances and examined the bills and other securities held at the head office, and compared the returns of tho branches with the statements in the foregoing balance-sheet, and have found the same to be correct. (Signed) G. P. Pierce, 1 Auditors . J. L. Wilson, J " Ul " vv *

The Chairman, in moving the adoption of the report and balance-sheet, said : — The circumstances of our last meeting invest this one with an interest and importance which the Board feel; and which, by the attendance to-day of shareholders who are usually strangers to our meetings, it is apparent that you also feel. This meeting is further marked by the disappearance from among us of the late Mr. Williamson, who has heretofore been perhaps our most prominent figure, whose death we regret, and whose counsels we miss. Referring to the balance-sheet now in your hands, I would remark, without further preface, that under the head of Deposits and Other Liabilities there is a decrease of £900,000, but this is almost entirely due to the items coming under the designation of Other Liabilities, and is of a casual character and without significance. In deposits proper there is a decrease of £64,000, which upon a total of over ten millions is quite immaterial. The items, Coin and Cash Balances at Bankers, and Money at Short Call in London, show the respectable total of £2,400,000. This is £800,000 less than at our last balance, when the amount was exceptionally high ; the reduction is in large measure accounted for by an increase of five hundred thousand in bills and securities held in London. I come finally to the important item of Profit, which, apart from deduction for bad debts, amounts to £54,000, by no means so satisfactory a figure as you have been used to. The shrinkage in our profits of late is an indication of the extent to which the Bank's earning power is crippled by the accumulation of advances and securities from which interest cannot properly be taken to profit, and which, nevertheless, wo have felt reluctant to realise at the serious sacrifice which would be entailed in the present depressed state of values. It is at the same time, we think, satisfactory that notwithstanding this burden, and notwithstanding the unprofitable condition of general business in the colony, we have been able to earn an amount equal to over 10 per cent, on the Bank's capital. All the more that the bad debts properly pertaining to the half-year are quite trifling, and would not appreciably affect the result. How to deal with this profit has been the occasion of much perplexity to us, and anxious consideration ; because on a strict valuation of our assets, and an equally strict compliance with the terms of the deed of settlement, we should not feel warranted in dividing it with an assurance that we had first provided for all bad and doubtful debts. We have, nevertheless, come to the conclusion that, because of an exceptional development of losses arising out of conditions inherited by the halfyear, and because of a depression, which we hope will not be of much longer continuance, shareholders should not be entirely deprived for two half-years in succession of the income from their Bank shares — upon which some of them, no doubt, in a measure depend—especially at a time when many other investments have become less productive. And we think that we are, on the whole, best consulting the interests of shareholders in recommending that a dividend at the rate of seven per cent, per annum, be declared, leaving the balance of the profits of the half-year for appropriation to bad and doubtful debt account. A lift in our commercial horizon would entirely change the aspect of affairs, and in view of the very hopeful prospects of the gold mining industry in our neighbourhood, and looking to the general revival which has occurred in Australia, we think we should beblameable if we adopted a too pessimistic attitude in dealing with the large and important interests committed to us. It will no doubt be in the mind of many of you to enquire what amount in the opinion of the Board would have to bo sacrificed in order to ensure the early realisation of the assets to which I have alluded, and the consequent restoration of the Bank's profits to their old standard. But you will, I think, recognise the difficulty of giving a categorical reply to such an inquiry, when you consider the present stagnation of the market for property in this country. It must be much a matter of opinion, and is a point on which opinions would vary. We should be glad, however, if you would appoint a committee of your number with whom we could confer on this and some other important matters which call for consideration. We have reason to believe that this course will be satisfactory to many shareholders, it would certainly be satisfactory to us, and we think it would be advantageous to the Bank. To fill the vacancy in the Board created by the death of the late Mr. Williamson, we have, in terms of the deed of settlement, nominated Mr. Walter Woods Johnson, of Wellington ; and, in the place of Mr. G. B. Owen, who has resigned, we have nominated Mr. George Buckley, of London, but a New Zealand colonist at present in Auckland—appointments which we feel sure will give satisfaction to Southern shareholders, and add strength to the Board. As no other shareholder has given

notice of candidature, we ask you to confirm our action. Gentlemen, it now only remains for me to move, "That the report and balance-sheet be adopted." Mr. l F. G. Ewinoton : Mr. Chairman, I have great pleasure in rising to second the adoption of this report and balance-sheet. I think no ordinary interest attaches to this meeting. At a time when the colony is emerging from a very severe trial it is only natural that the eyes not only of all persons throughout New Zealand, but also throughout the Australian colonies and Great Britain, should be turned to us to see how the Bank of New Zealand will be affected in passing through this trial. Especially does interest attach to us in New Zealand, because there can be no doubt that every man in every town and hamlet in this colony is directly or indirectly affected by our welfare. Now, I think that this report and balancesheet laid before us to - day will allay a great many misgivings. I* is no good niding the fact that there have been misgivings in the past ; all of us have had our misgivings about this gigantic institution. They may have arisen, and doubtless have, from ignorance, and that ignorance is due in some measure to the fact that the directors have not from time to time given the shareholders very much information. In your address this afternoon, you say the directors ask that a committee of investigation may be appointed. Mow, I think that that is virtually challenging hostile criticism. The directors have examined the affairs of the Bank, and know them thoroughly, and they say, "We know the worst, and we ask that this committee may be appointed." I, as a shareholder, will be extremely glad if this committee is appointed, and I hope that it will consist of gentlemen who are above suspicion, men who are independent, men who will fearlessly examine the affairs of the Bank, and tell us honestly the result of their investigations. If that is done, I think it will be found that this institution is resting on a firm basis : and the worst enemy of New Zealand could nob but wish that ib is so, because there can be no doubt that if anything went wrong with the Bank of Mew Zealand, it would throw back the progress of this colony by at least 25 years. I have much pleasure, therefore, in seconding the motion. The question was then put to the meeting, when the report and balance-sheet were unanimously adopted.

DIRECTORS. Mr. A. G. Horton said : Gentlemen, I have a motion to propose which I hope will meet with your approval, and it is that the nomination by the Board of Directors of Messrs. Buckley and Johnston to the two vacancies on the Board bo confirmed. I think that the appointment of those two gentlemen will be extremely valuable to the Bank of Now Zealand, especially in the South. .1 know myself something of the South and of Southern feeling, and I also know that the Bank has there a largo number of shareholders and a great number of constituents, and that there a very valuable portion of its business is conducted. 1 know something of Mr. Buckley, and I trust we may yet induce him to become a permanent resident amongst us, as I feel certain that hie presence on the Board will be valuable in many ways. Mr. Johnston is known to most of us, and I believe the appointment of these two gentlemen will give much satisfaction generally to shareholders, investors, and constituents. Mr. H. Green : I have very great pleasure in seconding the names of these gentlemen as directors. One of the gentlemen I have known for a number of years. I have resided in Wellington for fifteen years altogether, and I have known Mr. Walter Johnston for very many years. I know something of his business character, and I know something of the measure of his attainments as a financial man. Therefore, it is with great pleasure that I support the appointment of these gentlemen to the directorate of the Bank. The motion was unanimously adopted. shareholders' committee.

The Chairman : Now is the opportunity, supposing that any of the shareholders object to such a committee as that suggested by the directors, being appointed. Now is the time to determine who should be put upon such a committee, if it is agreed to appoint it. I shall be very glad to hear any such proposition as has to be made by any of the shareholders. Mr. Justice Gillies : Mr. Chairman and fellow-shareholders, I think it must be very satisfactory—as has been said by Mr. Ewington—to the shareholders that the directors have suggested that they should take the shareholders into their confidence. There can be no doubt that widespread doubt and uncertainty have prevailed among shareholders both in New Zealand and elsewhere, in consequence of the sudden fall in the dividend of the Bank at the last halfyearly meeting from 12$ per cent, to nothing; and I think the directors were wise, even although they have been able to declare a dividend on this occasion, in taking the shareholders into their confidence in order to support them in their action, and in order to re-assure the shareholders a3 to the position of the Bank. And I think the action they have taken, in making this recommendation, will recommend itself to the shareholders and to the public as an evidence of thou- conviction of the soundness of the Bank. I beg to propose a committee, such as that suggested by tho directors—a committee to confer with tho present directors and to investigate and report thoroughly on the state of the Bank. Those of you who have the deed of settlement of the Bank will observe by the 100 th section of that deed of settlement that there is provision made for this very thing ; that a special committee of investigation, or as it is called, special auditors, may bo appointed in order to investigate tho affairs ot the Bank. I am sure the appointment of such a committee will give confidence not only to the shareholders, but also to the outside public ; but, in order that that confidence may bo given both to the shareholders and to the public, that committee must be one of a character which will leave their report, whatever it is, above suspicion ; and 1 propose to nominate a committee for your approval, of gentlemen who, I think, you will find to be gentlemen of large business capacity, taken from all parts of the colony, who have had no relations hitherto with the management of the Bank, who are in no way dependent upon or indebted to the Bank, and whose report therefore may be accepted both by the shareholders and the public, as thoroughly independent and above suspicion. I have every confidence that tho appointment of this committee and their report, will give increased confidence in the Bank both to the shareholders and to the public ; because if there is anything wrong with the Bank, I do not think the directors would have asked us to appoint a committee, in the first place ; in the next place, ii there is anything wrong, it is just as well that we should face it. But I have every confidence that the appointment of this committee and the results of their investigations, will bo to show to the shareholders and to the public the soundness and stability of the Bank. I therefore propose the following resolution : —" That in accordance with the recommendation of the directors, a committee of the shareholders be appointed to confer with the directors and to act as special auditors to inquire into and report on the affairs of the company generally, in terms of section 100 of the deed of settlement," and that this committee shall be : Mr. John McLean, of Otago—he is very well known throughout the colony, perhaps not so well known in Auckland as in the South, but having known him for upwards of thirty years as a shrewd business man, and a man of means, an independent man, I think his name will be a guarantee not only to the Southern shareholders, but also in wider circles, as to the entire independenceoo r the Committee. There is also Mr. Buckley, of Christehurch, whom you have already approved of as a coming director. He has not been a director or in any way connected with the Bank previously ; he has been a large and successful merchant, being a member of the firm of Dalgetty, Buckley, and Co., and whose business knowledge and capacity, I think, is recognised not only here but in England. There is, then, Mr. Walter Johnston, of Wellington, whom you have also approved of as a director. He is well known throughout the colony, and I think also in London, as a business man of good capacity, and one who has been in no way connected with the Bank hitherto, and who is under no obligations to the Bank. There'is also Captain Colbeck, of Auckland. He, as you know, has been a large business man in England; he is a man of independent means here, and his name will carry weigh ; as having been in no way connected with

the directorate of the Bank hitherto, and being a capable business man. And I have been asked also to add to this committee the name of the mover. - I confess I would prefer if some one else had been placed on this committee instead of myself, because my engagements otherwise will prevent me devoting as much time as probably would be required by this committee. At the same time, at the request of a large number of shareholders, I have consented, if it is your pleasure, to act to the best of my ability, on that committee. There are five names which I think will guarantee the independence of the inquiry, the fairness, and the justice of it; and I hope it will tend to strengthen the position of the Bank, and to re-assure both the shareholders and the English public, as well as the New Zealand public. Gentlemen, I beg to move the resolution which I have read. Mr. A. Boardman : I beg leave to second that proposition, because to a certain extent it carries out what I myself suggested at our last meeting of shareholders. Those present, and those who read the report, will know that I took it upon myself strongly to advise the gentlemen who had begun to criticise the balance-sheet and accounts that a criticism of that kind would not only lead to no good, but might do a good deal of evil; for criticism from want of information is worse a good deal than no criticism at all. I hope that this committee will do what we could not possibly do in this room. The names of the committee are those of gentlemen well known throughout the colony, and it is very much bettor, in my humble judgment, that this inquiry, or examination and conference, should take place between a select number of individuals than that we should attempt to go into details and figures in this room, which we cannot do. I am also very glad, as an old Auckland resident, to find that, though this institution was founded, and has for a quarter of a century been well managed, in Auckland, the committee fs not one of Auckland gentlemen only. 1 think the infusion of new blood into the directorate of the Bank—and without any disparagement at all to the present directors— will have great weight throughout the colony, as Mr. Justice Gillies, has said, and also at home ; and, therefore, I hail with g eat satisfaction the fact that gentlemen of 1 aeir high standing have consented to act on this committee—gentlemen who will represent the entire interests of the colony, and our interests in England also. There is one other matter that I think is an important one. I ventured to say at the last half-yearly meeting — and you will excuse me quoting it—that ib was to be hoped that the direcbors would take into their consideration during the coming half-year the best means of regaining the ground which the Bank had lost. We have now evidence in the proposition which has been made that they are very anxious to do that in uniting with themselves the best ability they can get; and there is no better in the colony, I am sure, than that represented by the names we have gob. Looking at the reports of this Bank for a series of years past, and knowing as we do the various ramifications of its business, it is quite clear that if the affairs of the Bank— its capital and its business —if the affairs of this Bank are managed on sound business banking principles, there is not the slightest possible fear for the future of this Bank. In my humble judgment, the Bank will have as great prosperity in the future as it has had in the past. lam quite sure that will be the case, and I feel that the way the shareholders have acted when there was a sudden drop in the dividend, which was a serious thing for many of us—the way they supported the directors showed their confidence in the stability of the Bank, I therefore cordially support the motion which Mr. Justice Gillies has made, and I am quite sure it will be carried unanimously by this meeting. Mr. F. Cherry : That proposal has come upon us unexpectedly, but I must say that I can see the advisability of such a course. The directors may take great credit to themselves for having so well managed this institution for so many years, and in having hold the confidence of the shareholders unquestioned for many years ; but there is no use blinking the fact that the affairs have been mismanaged recently, for the very fact that nearly one-third of its reserve capital had been lost, and had to be written off; was proof .of that, and no one can deny it. I have heard outside such remarks as these: " That balance-sheet is all nonsense; if you try to realise those assets you could not get the amount set down." What we have seen during the last two or three years has shown that there has been something in these statements. However, the present proposal, as far as I can judge, is a very good one ; I think it is a step in the right direction. Hitherto the directors have had the sole control of the business of the Bank generally. From what I have heard and seen I have not the slightest objection to the names proposed. The motion was carried without dissent. Mr. G. P. Pierce : There is one question I should like to ask, namely, whether this committee which has been appointed will bring up an interim report, or whether it will not bring up its report till the next half-yearly meeting. I presume if an interim report is to be brought up it will be necessary to adjourn this meeting. The Chairman : That matter will of •course rest with the committee themselves. I should apprehend that they will find it convenient to make a report in a short time, and not delay it till next half-yearly meeting; but of course lam not in a position to say what tho committee . will do, nor to dictate to them anything which they do not think proper or fit. You have appointed the committee now, and it rests entirely with them as to the action they will take, and the report they will make to the shareholders, and when they will make that report ; but I may express an opinion that if I were placed under similar circumstances, I should be in favour of making a report before the next half-yearly mooting, and I should advocate its being done. But, as I have said, it is entirely in their discretion to deal with the matter as they bhi'.ik fit. Mr. G. P. Pierce: I asked the question because it may not be possible to call the shareholders together without some long notice, perhaps. I have not studied the thing myself. Tho Chairman: There is no difficulty about it. If you look through the clauses you will find that the directors can call a meeting if they please ; and if they do not please, a certain number of the shareholders can do it, but that will be a matter subsequently for the consideration of the directors, and for the consideration of tne shareholders themselves if the directors fail to do what the shareholders think they should do.

Mr. H. Green : Two of the gentlemen who havo been appointed special auditors have been elected directors. I would like to ask if that point has been considered. They will thus act in a dual capacity as auditors and also as directors.

Mr. Justice Gillies : Permit me to explain why I proposed those two gentlemen to be members of the committee, they being appointed also as directors. The inquiry is into the state of the Bank at the present time, the new directors having had nothing whatever to do with the direction of the Bank previous to this date. Their duties as directors will be confined to the management of the Bank in the future. The duty of the committee which has been appointed is to investigate the status of the Bank at the present time, and consequently there can be no objection to the new directors, but it will be rather an advantage, because they will have an opportunity of making an investigation into the whole state of previous affairs at the time they take office. Mr. H. Green : With all due respect to Mr. Justice Gillies, I see an inconsistency in this matter, because these two gentlemen have joined the Board, and therefore their position as auditors is likely to be prejudiced. To my mind it would be more proper if their election as directors did not take place until their duties as special auditors were ended. THANKS. Mr. F. L. Prime : I beg to propose that a cordial vote of thanks be given to the directors and officers of this Bank for their services during the past half-year. I think most of us havo confidence in the directors, and think that this vote of thanks is well earned.

Mr. L. D. Nathan : I have much pleasure in seconding the motion. The motion was carried unanimously. The Chairman : It is my duty, on the part of the directors, to thank you, gentlemen, for this mark of your confidence which you have shown towards us. There have been a great many adverse circumstances to the prosperity of the Bank for the last few years, and the directors no doubt have

had great difficulties in their way, and a great deal of anxiety, and a great deal of trouble. They have endeavoured during that time to do their best, and now they feel that they are compensated for the trouble they have taken by this expression of your confidence in giving them a vote of thanks. . Mr. John Murray, Inspector: Gentlemen, on behalf of the officers of the Bank, I beg to thank you for this renewed expression of your confidence. I need say no more on this occasion, but I am sure that every officer of the Bank will do his utmost to deserve bhe vote. The scroll minutes were then read, and the meeting terminated.

[The committee appointed by the shareholders have met, and have agreed to issue an important circular, which will be found in another column.]