THE NATIONAL BANK OF NEW ZEALAND.

New Zealand Herald, Volume XXVIII, Issue 8661, 2 September 1891, Page 6

THE NATIONAL BANK OF NEW ZEALAND.

THE COMMITTEE'S REPORT. I [from OUR OWN* CORRESPONDENT.] London, July 24. The following report of the informal committee, appointed on June 29, to consider the present position and business of the bank will be submitted to the shareholders at the meeting to be held on -the 3rd proximo :— j The committee have had placed before them the whole of the book 3 and papers they required, and have had several interviews with the secretary and auditor, who have afforded all the information in their power. The result of this investigation shows that most of the losses had occurred prior to ISSG —the estimate of probable loss made at that time having been- largely exceeded—many firms to whom advances had been made, and who were regarded at that time as sound, being unable to meet their engagements on account of the continued ' commercial depression in New Zealand. The committee find that mistakes have been made, both in London and the colony, in continuing accounts where increased loss appeared probable, and there is no doubt too sanguine a view was taken when prosperity appeared to be reviving in the colony, and the fact was not sufficiently recognised that prosperity, although advancing, was gradual and very slow. The amount proposed to be written off the capital appears —judging from the books, papers, reports from the colony, and information placed before the committee by the chairman, auditor, and officials—to be sufficient to cover the losses incurred to the present time, and they have no hesitation in recommending that the resolution passed at the recent meeting be confirmed, as being the only one calculated to place the bank on a solid fonadation. It is satisfactory to find the bank is doing a large and profitable business, and there is every ground for hope that the bank will share in the gradually increasing prosperity of the colony, especially if a more cautious policy is pursued in future by both managers and directors. With reference to the amount of land held by the bank as collateral security for advances in New Zealand, the committee deemed it advisable to have the fullest details placed before them, and they find the bank holds, as collateral security for debts regarded as doubtful, land of the value of ,028, and, as collateral security for accounts considered good, land of the value of £279,179. These amounts are very far below what were generally believed, and should be most reassuring to shareholders and all persons interested. With regard to the constitution of the Board, the chairman having stated at the recent meeting of the shareholders, that the directors had authorised him to say that if the resolution was passed they would place their seats in the hands of the committee, and were perfectly ready to abide by their decision, the committee carefully considered to what extent it may lie expedient to accept this offer. They have come to the conclusion that, in the interest of the bank and for the satisfaction of the shareholders, it is requisite that a considerable change should be made in the composition of the" existing Board. They recommend that the number of London directors should be reduced to six, and that no fresh appointment of a colonial director should be made. They understand that the following gentlemen are prepared to serve on the Board if it should please the shareholders to appoint them:— Air. E. Brodie Hoare. Mr. James Macandrew, Mr. J. M. Stobart, Mr. Steele, Mr. Thomas Seaber, and Mr. Philip Vanderbyl, and they recommend that these gentlemen lie appointed' accordingly. They likewise think that in the present condition of the bank the remuneration of the London Board should be limited to £2000 annually. The question of the general reduction of expenditure has occupied the attention of the committee, and, with this object, they have examined the books. They find the salaries generally on a very moderate scale, and they are not - prepared to recommend any reduction in salaries. An ill-paid servant never conduces to good management; but they would venture to suggest to the new Board the necessity of a thorough investigation into the nature and amount of business done at each of the brand) banks, with the view of considering as to how far it will be advisable to continue, with due regard to the interest of the bank, any branch which during the last six years has failed to show any satisfactory profit.. With regard to the call of_3os per share sanctioned at the last meeting, the committee desire to say that in their judgment such call is necessary for the well-being of the bank, and to afford confidence to depositors ; and the paid-up capital will certainly not be more than is sufficient, after the call has been paid, for the efficient working of the bank. The following facts should be generally known : Ist. The bank is not in immediate want of money, the cash in hand being larger than for many years past. 2nd. The resources available are quite sufficient to meet every demand,'and the depositors are amply secured by the uncalled capital, the shares being generally held by responsible persons. The committee cannot _ conclude this report without expressing their conviction that the first duty of the new Board of Directors will be to satisfy themselves that they possess in the managers or the several branches men upon whose judgment, discretion, and firmness they can place full reliance, for theso qualities are essential to the successful working ol any bank. The committee have no desire to dictate to the Board * the policy they should pursue, or to define the nature of their investigation of the repeated mistakes which have Jed to the present position of the bank, and the loss of so large a proportion of the capital, but they feel strongly that upon the thoroughness of the investigation mado by the new Board will materially depend the future prosperity, and sound position of the National Bank of New I Zealand, , :