TRADING BANKS

New Zealand Herald, Volume LXXI, Issue 21911, 21 September 1934, Page 12

TRADING BANKS

BUSINESS IN AUGUST NOTE ISSUE MOVEMENTS LONDON BALANCES INCREASE ADVANCES FALL SUBSTANTIALLY [nv telegraph—OWN CORRESPONDENT] WELLINGTON. Thursday The first monthly return of the six trading banks since the Reserve Bank commenced business was gazetted tonight. Issued under section 46 of the Reserve Bank of New Zealand Act, it contains a statement of their assets and liabilities at the dose of business on Monday, August 27, all amounts being shown in New Zealand currency. A similar return was compiled on July 30, before the Reserve Bank opened its doors. There is, consequently, a basis of comparison to show the movements in the first four weeks trading with the Reserve Bank in action.

The demand liabilities, or current account balances, in New Zealand of the six banks totalled £26,184,575 on August 27. Their time liabilities amounted to £40,263,006. By the Reserve Bank Act each is required to maintain reserves equal to 7 per cent of its demand liabilities and 3 per cent of its time liabilities. Taking the totals of these two items at August 27, the aggregate obligations of all the banks on this account would amount to approximately £3,040,800. The combined balances on that date amounted to £16,510,565. Changes in Deposit Levels The demand liabilities on free deposits totalled £24,621,606 on July 30, go there was an increase of £1,562,969 in the four weeks covered by the return. In the same period the fixed deposits decreased from £40,592,3/4 to £40,263,006, a difference of £329,368. The banks also had demand liabilitities elsewhere than in New Zealand, but incurred in respect of New Zealand business, amounting to £5,148,674 on August 27,- against £2,660,514 on July 30. The corresponding time liabilities were £748,479 and £738,887. At the end of July the notes of the trading banks in circulation amounted to £6,220,241. Four weeks later this total had been reduced to £3,609,164. At the same date the banks held £5,488,945 worth of Reserve Bank notes. The actual note issue of the Reserve Bank at that date was £7,975,310, of which sum, therefore, the pulblic held £2,306,365. Thus the total of all notes in active circulation on August 27 was £5,915,529, against £Q,220,241 on July 30. So Sales ot Sterling

The London balances held by the six trading banks in respect of New Zealand business increased in the -four weeks covered by the return by £2,350,449. The total on July 30 was £8,821,538 and on August 27 £11,171,987. During the same period the sterling exchange held by the Reserve Bank fluctuated very little. It is obvious the trading banks have not exercised their option of selling. sterling to the Reserve Bank. As other features of the return show, they have had ample scope to supply themselves with notes without calling on the Reserve Bank to purchase sterling exchange. ■ •■ # In the period reviewed the overseas assets in respect of New Zealand business held elsewhere than in London increased from £8,359,977 to £9,255,542. Thei%> features of banking business are now being revealed for the first time. The quarterly returns previously issued did not show the overseas assets of the banks held on New Zealand account. At the time the return was compiled the transfer of gold had not been completed. The banks still held an amount valued at £1,149,534. All is now in the hands of the Reserve Bank. While the changes and adjustments incidental to the establishment of a central banking system were beinc effected, the level of advances fell appreciablv. The advances and discounts of the six banks at July 30 amounted to £44,085,605. On August 27 the figure was £41,261,010, a decrease of £2,824,595.