STRONG PARTNER

New Zealand Herald, Volume 81, Issue 25047, 10 November 1944, Page 6

STRONG PARTNER

GOVERNMENT'S HOLDING THE CAPITAL STRUCTURE The Bank of Now Zealand under its present constitution is a semi-State institution. Since the bank crisis in the depression of 1894, when the Government of the day came to the aid of the hank, the State lias virtually been the predominant partner. The capital structure of the bank has undergone numerous changes since its incorporation on July 29. 1861, with a capital of £'500,000 in shares ol' £lO. Under various enactments the Government has acquired £2.109..'575 of the present capital of £6,328,125. The Government's holdings are £500,000 preference A shares, £1,375,000 13 preference, and £231,375 (J mortgage shares. In the hands of the public are £3,750,000 ordinary shares and £168,750 1) longterm mortgage shares. The long-term mortgage shareholders have no voting rights, and the_ capital may be cancelled by resolution of shareholders and repaid nt par. plus interest accrued since the last dividend. Distribution of Profits The distribution of the profits earned was laid down in the Hank of New Zealand Act, 1926. as follows: — £50.000 to preference A shares, issued to the Government; 6 per cent to C long-term mortgage shares, issued to the Government, 7J per cent to I) long-term mortgage shares; of the residue, up to L' 306.250. one-seventh to B preference shareholders (the Government), and six-sevenths to ordinary shareholders, and of any excess of £306.250. onethird to B shareholders and two-thirds to ordinary shareholders. Under this arrangement, out of the net profit of £353.110 earned in 19)3—11, after paying £777,003 rates and taxes, the Government received £87.500 in dividend and ordinary shareholders £262.500. while I) mortgage shareholders received £13.066, making the total dividend distribution for the year ended March 31 last £393.066. The reserve fund totalled £3.575,000 and undivided profits £373.902. Peak Earnings Over £1,000,000 The bank's earnings reached the peak in 1929, when net profit was £1,146,148 and the ordinary dividend was 14 1-3 per cent. Ordinary shareholders received a higher rate of 17£ per cent in 1920 and 15 per cent from 1911 to 1919 when ordinary capital was smaller. On the 1913 balance-sheet values, according to Jobson's calculation, the 1) longterm mortgage shares and ordinary shares were secured by net assets of £2O 7s lid and 41s Id respectively per £1 share fully paid. The directorate of the bank numbers six, four of whom arc nominated by the Government, and two are elected by the ordinary shareholders. For some time two Government seats have been allowed to remain vacant, while a third vacancy occurred through the death prior to the last annual meeting of Mr A. E. Mabin. a shareholders' representative. Seven Candidates for Seat Seven candidates have offered their services for this vacancy and an election is now proceeding. In the meantime Mr F. W. Dawson, a former general manager of the bank, has been appointed to the vacancy, but he is jot a candidate. The other shareholders' director is Mr R. W. Gibhs. while the chairman, Mr A. T. Donnelly, and Mr ,T. Dowgray are nominees of the Government. The directors' remuneration is £6500 a year divided as the.v may decide. There are 7700 shareholders on the New Zealand register of the bank. 1400 ' on (lie London register, and 150 on the Australian. The average holdings are £l5O. £420 -and £5lO respectively. LITTLE REACTION TRENDS ON RHAREMARKET LEVELS FAIRLY STEADY After some initial hesitancy Bank of New Zealand shares closed on a slightly firmer market on the Auckland Stock Exchange yesterday. Buyers restricted offers at the first- call to 435, ex dividend at the interim rate of 7d a share, with sellers at 445, compared with the latest on a cum dividend basis at 44s 6d. However, the market improved later in the day and at the afternoon call there were buyers at 43s 9d. while sellers backed off to 44s 6d, giving si valuation slightly better than that of the previous day. Reactions varied on the southern exchanges. In Christchurch business was done at 445. ex dividend. Neither buyers nor sellers operated in Wellington and no sales were recorded in Dunedin. SLIDING WAGES SCALE BOROUGH STAFF'S PROPOSAL (0.C.) HAMILTON, Thursday A letter from several members of the staff of the electrical department of the Hamilton borough seeking a review of their salaries was referred by the Borough Council last night to the Finance Committee. Since 1939. stated the letter, the salaries of employees of this department had not been reviewed, and work and responsibilities bad increased considerahlv since that time. The suggested selteme for the amendment of the electrical si,-ill's wages was based on the number of units of electricity sold during the year. a. proposal which had already worked successfully in England. -All members of the department would receive amounts proportionate to their positions. By fixing such a sliding scale, added the letter, the council would be raising members of the electrical department to the status of partners in a business. Thus they would be given an incentive to make it a profitable concern.