THE UNION BANK OF AUSTRALIA (LIMITED).

New Zealand Herald, Volume XXX, Issue 9308, 18 September 1893, Page 3

THE UNION BANK OF AUSTRALIA (LIMITED).

(From the Money Market Reriew of -August 5,1893.) The annual general meeting of this Bank was held on Monday at the offices, Bank Buildings, Lothbury, under the presidency of Mr. Arthur Flower.

There was a very large attendance, and upon the directors entering the room Mr. Sebag Montefiore rose from the body of the meeting and , said Fellow shareholders, I think that we ought to give a welcome to the directors, who have hitherto safely piloted this Company through very dangerous and tortuous channels. (Hear, hear.) lam sure you will all join in this welcome which we offer to them on coming into the room to-day as significant of the way we appreciate their cautious and excellent management— —also as a mark of our deep sympathy for the anxiety they must have felt daring tho acute banking crisis in the Australian colonies, which I am happy to say has now passed away. (Hear, hear.) The motion was carried by acclamation; The Chairman, on behalf of himself and colleagues, briefly, returned thanks, expressing the great gratification that it afforded them to win the approval of the shareholders. He theu called upon the manager, Mr. Mewbum) to read the notice calling the meeting. Mr. W. R. Mewburn (manager) then road the notice.

The following report of the directors and statement of accounts annexed thereto were taken as read:—

The directors have to submit to the shareholders the annexed balance-sheet of the bank to the 28th of February last, duly audited, which exhibits a net amount of profits, inclusive of the balauce brought from the previous half-year of £70;317 Os 6d, admitting of a dividend at the rate of 8 per annum, equal to £1 per share, which will absorb £60,000, and leave £15,317 0s 6d to be carried forward. Although the figures in the balance-sheet are those of the '28th of February, the directors, in making reserves for doubtful dependencies, have had regard to the general depression consequent upon the numerous important banking suspensions that have since occurred in Australia. The directors much regret to have to report the retirement from the board, owing to failing health, of their esteemed colleague, Lord Hillingdon, who was a director for a period of twenty-eight years. Lord Hillingdon's thorough knowledge of banking and of general business, and his sound judgment, have been of much service to this institution. The vacancy thus created has been provisionally filled, in accordance with the deed of settlement, by the appointment of Lord Hillingdon's eldest son, the Hon. Charles William Mills, of Messrs. Glyn, Mills, Currie and Co., who now offers himself for election. Arthur Palmer Blake, Esq., and Sir Robert George YVyndham Herbert, G.C.8., are, the directors who retire by rotation, in accordance with the deed of" settlement, and they now offer themselves for re-election. The Bank's auditors, Albert Deacon, Esq., and Frederick YVhinney, Esq., chartered accountants, also retire, and offer themselves for re-election. The dividend warrants will be transmitted by post on August 2, and the dividend will be payable in the colonies at such date as the general manager may fix after receipt of telegraphic advice.

Liabilities. Capital £4,500,000 0 0 1 Less Reserve liability .. ... 8,000,000 0 0; Paid up .. .. £1,500,000 0 0 Reserve funds 1,000,000 0 0 Invested in : —————— Imperial Guaranteed Four Per Cent. Debentures £200,000 0 0 Local loans (Imperial) stock .. 50,000 0 0 Indian Government sterling stock f>o,ooo I) 0 Colonial Government and municipal debentures 200,000 0 0 Bank premises and property .. 500,000 0 0 Circulation .. 402,870 10 0 Deposits (includinginscribed stock deposits) 18,118,495 4 1 Hilh payable and other liabilities ! (including reserves held against doubtful debts) .. .." .. 2,800,701 Oil Balance of undivided profits .. 75,317 0 i> £24,017,482 li C [There is a contingent liability— now reduced to i' 25,00 respect of the subscription to i the guarantee of November ISth, 1890, in the matter of Baring Brothers and Co.'s estate.] Assets. Specie on hand and cash balances.. £3,213,380 17 1 Bullion in band and in transitu .. 102,224 19 11 Money at call and short notice in London 907,000 0 0 Consols, Local Loans (Imperial) Stock, and other stocks of, or guaranteed by, the Imperial Government.. .112,232 7 .1 Colonial and municipal stocks .. 581,331 2 1 £1,003,013 9 0 Bills receivable, loans and other securities at London office • • 2,528,10117 8 Dills discounted, hills receivable, loans and other securities at the branches 15,502,437 5 7 Dank premises and property in the colonies 595,521 9 11 London leasehold premises.. .. £86,632 18 i Reserve against same .. .. £10,152 9 i Six months' interest thereon at .'H per cent. .. .. 177 13 2 10,310 2 6 75,202 15 10 £24,017,482 15 6 Statement ok Profits. Balance of undivided profits at August 31. 1892 £95,708 110 Out of which a dividend was de- „. clared of 90,000 0 0 Leaving a balance of .. £5,708 1 10 Profits of the past half-year, after making provision for all bad and doubtful debt* .. .. - £189,753 0 0 Less : Remuneration t o local directors and salaries and a 1 low a nces to the colonial staff £72,579 i 9 General expenses in the colonies, including rout, taxes, stationery, etc 31,233 14 11 Remuneration t <> the Board of director and auditors, salaries of London office staff, rent, taxes, stationery, and general expenses 14,274 4 11 Income tax .. .. 2,001 10 U 120,149 1 4 £09,608 18 8 Balance of undivided profits at this date £75,317 0 6 Arthur Flower "| John S. Hill (-Directors. R. G. W. IIEKKEUT Lmcotorß, C. E. Bright J VV. R. Mkwborn, Manager. T. C. C. .Sails dicks, Accountant. London, July IS, 1893.

We certify that the various securities held in London have been produced to us, and that we have examined the balance books of the several branches in the colonics for the six months ended 28th February, 1893, and the books and accounts of the London office for the same period,. having compared the combined results with the above balancesheet, have found the same correct. Frbdk. Whinney, "l Chartered Accountant > Auditors. Albert Deacon J The Chairman said: Gentlemen, my duty to-day is to remark upon, and to recommend for your adoption, the report and balancesheet to February 28, now presented to you. But with your permission I will first make a few remarks upon the very serious course of events that have occurred in Australia since that date. It was, I think, on the very day of our last meeting in this room that the suspension of the Federal Bank of Australia was first announced in the newspapers. This misfortune was followed on April 4 by the suspension of the Commercial Bank of Australia. After this, as you are aware, one disaster followed another at gradually lessening intervals until, on May 1(5, the climax was marked by the suspension on that and the previous day of no less than five banks, bringing the total suspensions during the six weeks from the 4th of April to the Kith of May to twelve banks, "with deposits of some £80,000,000 of which some £28,000,000,1 believe, had been received in tins country, the failures being distributed over the different colonies in the following proportions:—Five banks, with- head offices in Victoria, with deposits of £36,000,000; three banks with head offices in Queensland, with deposits of £10,000,000; two banks, with head offices in New .South Wales, with deposits of £22.000,000: two banks, with head offices in London, with deposits of £12.000,000. It must be impossible to realise the misery and distress that followed ill the wake of such disasters as these, which are certainly not to be accounted for by anything in the condition of the staple pastoral agricultural industries of the colonies. But what you will wish to hear from me to-day is some account of how the Union Bank met this storm, and with what effect, and this brings mo to our present balance-sheet, from which you will see that we held at the end of February specie on hand and cash balances, bullion on hand and in transitu, and money at call and short notice in London, amounting to £4,200,000 and investments in London amounting to £1,090,000, against deposits and circulation of £18.600,000, or a total reserve in cash and available securities representing 28 per cent.. of total liabilities in London and the colonies. I have not dealt with bills payable and bills receivable, because, being about equal in

amount, one may bo said to balance the other. I should state that the investments referred to in our balance-sheet consist of £510,000 Imperial and £580,000 Government and municipal securities. I think on the present occasion it may interest you to have this matter carried to a later period, and by later advices received from the colony, and from telegrams received weekly during this crisis I am able to inform you that whereas at the end of April our actual coin and bullion in the colonies amounted to some £3,800,000 being '27 per cent, of our total colonial.lia bilities; this reserve in the colonies has never between February and the present time' reached a lower point than that represented by 24$ per cent, of our colonial liabilities, quite irrespective of our usual London resources, which have in no way been depleted totcontribute to this result, while at present date our coin and bullion in the colonics amount to some £3,700,000, which, with our London resources, comprised under the head of money at call and short notice in London —coin in transitu transhipped in the ordinary way of business (failing other means of remittance), and investments—brings our total present reservo in cash and available securities to 30 per cent, of our present liabilities in London and the colonies. Our London liabilities, I may ■ say, consist of £750,000 inscribed stock deposits, and the balance are deposits spread over a period of years. I feel,' gentlemen, I owe you some apology for inflicting such a mass of figures upon you, but ; it seemed to me that this was an occasion When some such statement might be deemed appropriate or even desirable, while I certainly was not unnaturally anxious to lay' it before you. (Hear, hear.) ' I think you will agree with me that during a time of almost universal panic such an exhibition of confidence on the part of the public as is shown by the figures I have put before you is a thing to be remembered by all connected with this bank,'and to be remembered with great jpride. (Cheers. But, quite apart from any question of confidence, it must be evident to everyone how great must have been the pressure upon the very few banks remaining open to meet the. actual current necessities at such a time as this. And it was to enable Mr. Finlaysou as far as possible to meet "these requirements by granting unusual and temporary facilities, not only to his own customers, but also to those of some of the suspended banks, that we sent him from London Hi May last two shipments of 250,000 sovereigns each, which, as you may judge from the figures I have mentioned, were certainly not called for by a,ny ordinary coin requirements. (Cheers.) You have heard, gentlemen, that we met this crisis in a very strong position, and that we have fortunately been able to maintain a very strong position, and I should now like to draw your attention to the fact that this was no fortuitous or unforeseen strength, as is evidenced by a reference to our balancesheets for the last four years, from which it is seen that our rese*ve of coin and bullion in the colonies against our liabilities in the colonies has been a fairly uniform one, and has averaged for that period 25 per cent., independent of money and investments in London. (Applause.) For some time past, in fact, Mr. Finlayson has felt that there were elements in the banking situation in Australia which rendered it advisable for him to keep exceptionally strong in liquid resources, and he has acted accordingly. This policy has, of course, had its effect upon the profits of the bank, but 1 am sure you will be of. opinion that it lias been amply justified, and more than amply rewarded. (Cheers.) I do not think that bankers or bank managers have often been subjected to such a long-continued strain of daily and hourly anxiety as has lately been experienced by all those connected with Australian banks. And I can assure you that not the least of the anxieties felt by your directors throughout this trying time has been as to how our general manager, Mr. Finlayson, would bear up against the strain of the succession of disasters and emergencies with which he was contending. His was no ordinary position, as we over here understand the position of a bank manager in time of trouble. 'Not only was he thrown entirely on his own resources, with no State bank or bank corresponding to our Bank of England to fallback upon in case of need—this he was prepared for, and had done his best, as you see, to provide against. But his difficulties were of a most complex and constantly changing character, for this crisis lias been attended by some startling developments in the history of banking. First there was the acceptance of, and I believe in many instances the seeking for, what has been called trust accounts by the banks immediately after their suspension. This is a process which as yet 1 think is hardly understood over here. Then, upon one occasion, Mr. Finlayson was informed late upon .Sunday night, April 30, that it had been decided j by the Government, quite without reference to him, to, suspend all banking operations! throughout the colony of Victoria for five days, commencing on the following morning, and he had, upon his own responsibility, in concert with Mr. Sawers, of the Bank 1 of Australasia, at .once to issue instructions to all his managers in Victoria to open the bank as usual, in spite of the proclamation. (Cheers.) I need hardly tell you that when he was able to telegraph to us we cordially approved of his action in this matter. (Hear, hear.) But I am sure you will see that it was a momentous occasion on which to have the act first and telegraph after. (Hear, hear.) Then, again, there was the authorisation of bank notes as legal tender in the colony of New South Wales. Mr. Finlayson felt very disinclined to.put his customers to the possible inconvenience of having to accept notes' and again, in concert with Mr. Sawers, of the Bank of Australasia, he gave instructions that for the present customers were to l>e paid, as usual, in coin or notes at their option. And though this was found in practice to mean that these two banks would have to meet the coin requirements of the colony of New South Wales*, and had to be somewhat modified, yet its adoption did good, and tended to restore to people's minds some of that confidence which is so much wanted at such times as these. (Hear, hear.) Gentlemen, the directors are - very proud, as I am sure you will be, of the confidence which has been displayed in the Union Bank during this time of trial — (cheers) —and they are very proud, as 1 am sure vou will also be, of the manner in which Mr. Finlaysou lias conducted its affairs with such credit to the bank and, as we think, with such honour to the Australian colonies. It will be the wish of the directors, at a later date, to give more substantial shape to this recognition, and in this wish I think we may count on the concurrence of the shareholders. (Hear, hear.) 1 have heard it freely stated during the heat of this crisis that Australian banking in the abstract was conducted on an unsound principle, but I think that the course of the Union Bank, as I have endeavoured to put it before you, affords fair grounds for argument in support of the belief that with an adequate reserve invested in sound securities entirely outside its business, with cautious management, and with adequate liquid reserves against its liabilities, whether in London or in the colonies, an Australian bank may be conducted on such lines as to enable it to withstand, and to entitle it to withstand, even such a crisis as the one which is now, we hope, passing away. (Hear, hear.) And a more severe trial I do not think any bank has ever been called upon to undergo. (Hear, hear.) I do not think there is any special feature in our accounts calling for remark from mo other than those I have noticed. The valuation of the accounts of the Bank of South Australia has proceeded as rapidly as perhaps could bo expected considering the hindrance that must undoubtedly have been caused by the recent bank suspensions. Wo should now, I hope, soon be in a position to close this matter, and it is a source of gratification to know that the colony of South Australia, in which the bulk of these accounts are situated, has been less affected by recent events than perhaps any other part of Australia. (Cheers.) The Union Bank has, as you may imagine, lately acquired much fresh and valuable business, and will no doubt continue to do so to the full extent of its resources, and the object of all connected with its management must now be to profit by all lessons to be learnt from recent occurrences, and still further to strengthen its position and perfect its system of management. It seems probable that, owing to the re-construction of nearly all the suspended banks, there will shortly be us many banks doing business in Australia and employing as much money as heretofore. Ami although under other circumstances the dividend of 8 per cent, now proposed to you might seem a disappointing one to our shareholders, yet, under all the conditions to which I have alluded, and in ■view of the great depreciation that must for a time affect all classes of Australian securities, and the consequent necessity of more than usually ample reserves, I feel sure that the shareholders will accord to the directors that confidence and support which. has never beeu wanting in the past, while I, on behalf of the directors, can only assure you that we shall make it oar endeavour, while doing what we believe to bo the best for the general welfare of the bank, to act as liberally in this respect towards the 'share.holders as their own best interests shall seem to allow. (Hear, hear.) Gentlemen, I have bespoken your thanks in conjunction with our own to our general manager, Mr. Finlayson, on whom has fallen the brunt of recent anxieties ; and with regard to Mr. Mewbum and Mr. W. E. ' Carbery, our managers in London, 1 can only say that no one who has not been—as I have—in constant communication with them can realise the strain of watchfulness and anxiety that has fallen to their share during the anxious time to which I have referred, nor the calmness and equanimity with which they have met all emergencies and all requirements. (Cheers.) To them, as to Mr. Finlayson'a staff in Mel-

bourne, and to the managers of all our branches, as well as to every member of the staff both in London and in the colonies, 1 would wish, with even more than usual emphasis, to offer, on behalf of the directors, our most , earnest appreciation 'of their . services during this most trying six months. It is a matter of great regret to the directors that Lord Hillingdon should have found it necessary, on the ground of health, to restrict his business engagements to a point which would not allow of his continuing to give the time and attention which is, of course, required at such a bank as this, and that he should have found it necessary, in consequence, to resign his seat at our Board. (Hear, hear.) But I am glad to be able to add that, as you will see mentioned in our report, we have been able provisionally to fill the vacancy, thus created in the most satisfactory manner, by the appointment of his eldest son and partner, Mr. Charles W. Mills, who now offers himself for your election. I beg to move, " That the directors' report and statement of accounts now submitted be adopted." Mr. Botly seconded the resolution, and said that he had just received a telegram from a reliable source, recording a great improvement in public confidence in Australia. (Cheers.) The resolution was then put and carried without discussion, The Chairman then moved " That the Hon, Charles William Mills be elected a director of the bank in the room of the right Hon. Lord Hillingdon, resigned." Sir R. - Herbert seconded the motion, which was carried. The Chairman then moved, " That Mr. Arthur Palmer Blake, one of the two directors retiring by rotation, be re-elected a director 'Of the bank." ' Mr. W. O. Gilchrist seconded the motion, which was carried. . The Chairman then moved " That Sir Robert George Wyndham Herbert, G.C.B, one of the two directors retiring by rotation, be re-elected a director of the bank." Sir C. Nicholson, Bart., seconded the motion, which was carried. Mr. Botly proposed, "That Mr. Albert Deacon, of 12, Fenchurch-street, merchant, and Mr. Frederick Whinney, of 8, Old Jewry, chartered accountant, both in the City of London, be elected auditors of the bank for the year ending June 30, 1894, at the'remuneration of £300." Mr. Sebag Montefiork seconded the motion, which was carried. The Manager then read the dividend announcement, which stated that it would be payable on the 3rd inst. Mr. F. . Gore Browne then proposed a cordial vote of thanks to the chairman and directors, to the general manager and staff in the colonies, and to the manager and other officers of the London staff for their loyal and energetic services during the past six months. Mr. George Salting seconded the motion, which was carried. The Chairman briefly replied, and the proceedings terminated.