Bank of New Zeeland Meeting.

New Zealand Mail, Issue 867, 12 October 1888, Page 29

Bank of New Zeeland Meeting.

(PROM our own correspondents.) Auckland, October 4. Referring to the proceedings at the meeting of shareholders of the Bank of New Zealand, the New Zealand Herald says : —“The Committee have not belied the promise of their appointment; indeed, some will think that they have done their duty a little too heroically. That, however, is a matter of opinion; but of one thing there will.be pretty unanimous conviction, that is if there had been any lurking weakness yet remaining it would have been brought to light. We would certainly have wished that the disclosures had been of a less startling character, but the facts had to be fairly faced, and though some may wish that there had been a little more tenderness in handling them, judging from analogy and experience, we feel confident that this plain speaking will not be without its good effect, especially at a distance, where personal sympathies and antagonisms do not exist. The Committee had work to do, and the unmistakable absence of fear, favour, or timidity will be accepted as an indication that they have done it thoroughly. As to the general effect of the report on the bank itself, critics at a distance, who have been afraid that things would not be faced, will surely bel satisfied now ; and this bold confronting of facts, accompanied as it is by well judged measures to meet the conditions, can hardly have any other than a good result. The accession of new blood and fresh financial strength.in London must prove of great while the addition of new capital, making a total of £1,200,000 paid-up, accompanied by £1,500,000 of reserve liability, will leave no room for question as to stability and safety, and more especially in view of the severe pruning to whioh the securities have been subjected. We cannot close, our eyes to the fact that the doubt respecting the fine position of the Bank, of New Zealand ha 3 exercised an influeuce in retarding that revival of confidence and enterprise which wo have all been looking for, and the removal of that doubt must have a correspondingly good effect. The indictment against the Directors is certainly couched in severe terms, and we judge from the remarks at the meeting that it will not pass unchallenged. We assume that the losses reported by the Committee must be accepted as facts, and ‘facta are things which winna ding,’ and they will be hard nuts to crack, we fear. Still the shareholders and the public will not object to a little more light, should discussion elicit it. Meantime the necessary resolutions have been passed, and the grave business of putting the bank’s affairs in order will go on irrespective of personal questions of an (interest mainly local.” Dunedin, October 4. From private telegrams received in Dunedin, it appears that my telegram to you of last night, stating that after the report of the Bank of New Zealand was known tha leading merchants here offered £9 10s for shares, reached you as £5 103. The mistake was made by the Telegraph Department, as my copy was clearly £9 10s, buyers. On the previous evening they were prepared to give £l2 10s ; so that the drop ia price was £2 103. The Otago Daily Times, commenting on

the Bank of New Zealand meeting, says : “We believe that after the first feeling of dismay among the shareholders at the whole of the bank's reserve and £300,000 of its capital having to be written off, there will supervene an absolute confidence in its future. It is apparent that the Committee have performed the difficult task entrusted j to them in an able and fearless manner. We doubt not that the shareholders are quite prepared to accept the Committee’s assurance that they have faced and disclosed all, and with knowledge confidence will boos be restored.”

The Herald, after enumerating tha proposals in the report, says : — 11 If this is not taking the bull by tha horns we really do not know what is. The most pessimistic financier will be at last fain to confess that the Bank of New Zealand has at length faced the music. The operation to be carried out will have the effect of restoring confidence not only in the power of the bank to meet its liabilities, ifor that has never really been doubted, but in its value to the investing public."

Christchurch, October 4.

The feeling of renewed confidence in the Bank of New Zealand was strengthened today on a perusal of a full text of the Committee’s report. A broker states that there are buyers at £S ' 10s, but the shares are hard held, aud there are no sellers. In a leading article on yesterday's meeting the Press says : “That the Committee have thoroughly and exhaustively discharged their duty will be admitted by all who read the trenchant report presented to the shareholders at yester- - day’s meeting. From the first sentence to the last the report bears the impress of being a complete and candid exposition of the bank’s position, and should set at rest once for all any doubt as to the actual state of the Colony’s principal banking institution. The shareholders and the public now know the worst, and * eminently unsatisfactory to the shareholders,’ to use the Committee’s words, as are the disclosures, it is most reassuring to learn that there is not the slightest ground for anxiety as to the future. The Committee were early in their investigations able to satisfy themselves *of the soundness of the bank in respect of its ability to meet its engagements, a conviction which further examination only confirmed. Having arrived at this eminently satisfactory conclusion, the Committee proceeded to make a searching inquiry into the various securities by the bank, and they speedily discovered the existence of a considerable number of securities which were totally inadequate to cover the asaeis against which they were held, and involving losses which the Directors had not faced. These losses, it must be admitted, are very large, and indicate only too conclusively a system of management in the past by no means creditable to the Directors responsible for such a result. It is only right, however, to say that the Committee’s investigations have been made at what we hope is the close of several years’ extreme depression, during which the values have fallen all over the Colony in a mo3t exasperating fashion. Although it may be said, and justly so, that many of the Bank’s losses should not have been incurred, or if incurred should have been faced and dealt with long ago, there is at least some comfort in knowing that they have at length been exhaustively inquired into, that the Bank is now able to get rid of its unproductive assets, and that the management will be placed in a position to devote its attention to legitimate business in future. The very gravity of the situation has forced the Committee to carry through a searching investigation and to make a clean breast of the whole business. The opportunity has at length arrived for reorganising the administration. How open to blame that has been in the past is made plain from the outspoken, not to say severely condemnatory remarks of the Committee. Every bad and doubtful debt has been provided for, and the bank now enters upon a fresh career free from a heavy load o? difficulty and embarrassment.” After referring with satisfaction to the accession of strengsh which the bank has received among the highest financial authorities in London, the Press goes on to say—“As to the wisdom of the course recommended by the Committee, there cannot be any question. The bank is only doing what the Colony itself has been accomplishing during the last twelve months. The Legislature, after years of hesitation, has at length faced its position. The policy of borrowing and squandering, with all its lamentable consequences, has at length been brought to a close, and we are entering upon a new and bright era, during which we intend to depend upon ourselves, and devote our attention to the legitimate task of developing the great resources of our Colouy in a rational manner. Simultaneously with this new departure on the part of the State, the Colony’s principal banking institution has wisely resolved also to put its house in order. This heroic decision on the part of the bank is an event of almost equal importance to the new policy inaugurated by Parliament in the second session of ISS7, and its effect upon the future of the Colony it is almost impossible to estimate. With the Government pursuing a careful and prudent policy, and all our banking institutions acting upon similar lines, the people of New Zealand can look forward with cheerful confidence to a period of quite safe and steady progress, to which it has been for so many years a stranger. It is a fortunate thing that this radical change of policy, both on the part of the Government and of the Bank of New Zealand, has taken place at a time when heavy cloud of depression lately hanging over the Colony has commenced to lift. Any strain which otherwise might have been placed upon our resources will be minimised, if not entirely neutralised. The want of confidencein therColonyso freely expressed in some quarters elsewhere, will no longer be justified when it is seen that we have sufficient confidence in ourselves to tell the whole truth aud court hostile criticism. We have no hesitation in saying that the Committee of Investigation in bringing down such a report, and the shareholders of the Bank of New Zealand in placing it iu their power to. present such a report, have rendered that institution and the Colony anincalculable service, for which they deserve the best thanks of the entire community.” The Lyttelton Times speaks in equally confident terms regarding the future of the i

task, it says :—“ The bank faces its.losses, pays the consequences, and goes on its way with prudence and judgment. The bank is, in fact, equal to the occasion. The crisis in the affairs is a thing of the past, and its career of usefulness in the future is, there is ever3' reason to believe, assured. The best feature of this episode in its. history is that it places its affairs in order a the cpsning of a period of general prosperity. It starts unburdened on the next period of its career. Every man of sense wilt admire the courage and prudence of the determination, and applaud the completely exhaustive method of its statement. These are good guarantees of the bank’s stability. The best thing about the whole matter is that so many men of financial standing think so, and have substantially backed their opinion. The bank’s own Committee has weighed the institution and not found it wanting ; and its verdict has been endorsed by men of both experience and standing well qualified to know. Every one may have losses—everyone has losses in bad tiine3 —but it is not given to everyone to emerge from them uncrippled for profitable business. It is a national benefib’that the Bank of New Zealand is of the more fortunate but less numerous division.”

(PER PRESS ASSOCIATION.) Auckland, October 4. After the first surprise occasioned by the publication of the Bank of Now Zealand Committee’s report there is now a strong and growing feeling of congratulation and confidence here. Brokers say the whole of the 100,000 shares (new issue) can be placed if desired. By Electric Telegraph.—Copyright. OPINIONS AT HOME. (PER PRESS ASSOCIATION.) London, October 3. The Bank of New Zealand has issued a circular explaining the situation. The Standard thinks the Bank acted wisely in taking the bull by the horns. The Financial News urges that the inquiry should be extended to the companies known to be associated with the Bank. October 4. Now Zealand 4 per cent, inscribed stock has fallen from par to 96J-. The Bank of New Zealand shares are quoted at LlO. Tho deffiue in New Zealand stock is due to the Bank of New Zealand disclosures, which have depressed the market. London, October 4. The Standard says the circular issued by the Bank of New Zealand is the most satisfactory paper that has emanated from the bank for a long time; it frankly discloses the truth and corrects past errors, while providing a remedy for the unfortunate position into which its affairs had fallen. The proposals for a clean balancesheet and obtaining a sufficiency of uewcapilal are extremely reassuring. The Times considers there is good reason to hope that the measures proposed will prove effective. The Bank’s shares fell to L 9, but have recovered slightly. SPECIAL. London, October 3. The Daily News, in referring to the Bank of New Zealand, says its losses in two years amounted to nearly a million. The same paper says New Zealand is suffering from the overfinancing of a sanguine Treasurer. London, October 4. The Financial News condemns the secrecy which has surrounded the operations of the Bank of New Zealand, and describes the Bank as founding a corner in New Zealand finance. It considers the credit of the Colony is involved with the Bank. The Daily News is of opinion that, despiteYogelism,New Zealand is quite solvent. London, October 6. The Economist considers that the reckless management of the Bank of New Zealaud should be a warning to other financial institutions against advancing money recklessly ou properties the value of which has been unduly inflated. The Statist thinks the right policy has been pursued, and one calculated to regain confidence.