BANK OF NEW ZEALAND.

New Zealand Mail, Issue 1288, 5 November 1896, Page 38

BANK OF NEW ZEALAND.

The adjourned annual meeting- of shareholders of the Bank of New Zealand was held in the Chamber of Commerce on 'i hursday afternoon, Mr W. Watson, president, in the chair.

There were about 20 shareholders present. The report and balance-sheet were laid on the table. The report stated that the retiring directors, Messrs Kennedy and Macarthy, had been re-elected at the ordinary general meeting held on 27th August last. During the year the business of the Colonial Bank had been acquired. Branches had been taken over and established at Asburat, Bluff, Campbelltown North, Cromwell, Eltham, Kuaotunu, Kurow, Ophir, South Dunedin and St. Bathans, and closed at Atnberley, Fairlie, Geraldine, Otahuhu and Pukekohe.

THE PRESIDENT’S ADDRESS.

The President, in moving the adoption of the report and balance-sheet, said : —The balance-sheet of the bank as of 31st March, 1896, has been circulated amongst you, and is the same as that laid on the table of the House of Representatives on 19th June last, with the exception of the amended adjustment referred to in the note at foot, which reduces the balance at credit of profit and loss account bv .£12,492 5s id, making it now £140,083 17s. The board had nothing to do with this adjustment, the matter being entirely in the hands of the Colonial Treasurer and the auditor of the bank, as provided by the Act of 1893. The total net pr fits of the bank for the year ended 31st March last, after payment of dividend on the guaranteed shades or stock, before making provision for bad debts, but deducting the <£12,492 5s Id just mentioned, were £06,201 17s 4d. Out of this sum, bad debts were provided for to the extent of £56,501 Us sd, leaving the balance of £39,700 os lid, which, added to the sum of £383 1 Is id carried forward from last year, makes £4O 083 17s available. I he bad debts wiitten off consisted mostly of dregs of the Australian business, which the board, after the most careful enquiry possible, found it advisable to provide for. According to section 11 of the Bank of New Zealand and Banking Act of 1895, the directors have to appropriate the balance of the profit and loss account as follows : Dividend at 31- per cent, pe" annum on £shO.'*o ■ preference shares, from Ist January to 31st. Mi rob, ISHG. £4375 ; payment to Use s Realisation Board, £35.7 *8 17s : total, £lO 033 17s. therefore now report to you 1 hat this appropriation will at once bo ma c. owing to the voluminous information made public by the recent Parliamentary o umnittses, we deem the present a fitting- lime io place before you succinctly the po Avion o f the bank as it. was when the present board assumed control two years ago, what has been done in your interests since then, and the position and prospects at present. 0:i 17th October. 1894, I reported to the Government that of £11,009,500 nominal assets only £5,481,000, or loss than half, were profit producing; more than half being dead irom y, that is, money so invested as to bring in no income whatever. At that time <h»> liabilil u*s on which the bank hrd to pay interest were £6,300,000, and in tlie-e circum - rrnu vs it will surprise no one to know that the institution was being carried on at a loss. Tt was practically responsible for about £4.400,000 on account of the Bank of ,N cw Zealand Estates Company and Auckland Agricultural

Company, and between the bank and these companies there were about .£2,300,000 assets which were only nominal, the money being 1 actually irrecoverable. I need hardly depict to you what would have been the effect had the business been allowed to go into liquidation at that time. So far as shareholders were concerned, the whole of their capital and reserve liability would undoubtedly have gone to meet the ascertained deficit ; and as to the further loss which would have accrued to the Colony and those concerned in the bank’s business from a liquidation in such a year of depression as 1894, it can only be conjectured : that it would havo been heavy admits of no doubt. What has been done since 1894 in your interests, and in the interests of the Colony and those concerned, may be briefly stated as follows : —An entire separation has been effected between the hulk of the assets ot the Ksiates Company and the bank, leaving only a residue in the bank’s hands for speedy realisation a residue so small that no danger to the bank can possibly accrue from it. At 81st March, 1895, this residue, which included valuable trading concerns and other assets written down to latest values, amounted to £534,989. This sum has since been reduced by £117,392 received on account of realisations, and we are now in treaty to effect further sales. The bank’s stability has been placed beyond doubt by this separation and by the izsue of the Government preference shares, and the receipt of Assets Realisation Board debentures. A reserve fund of .£23.418 4s lid has been created The earning power has been increased by the purchase of the business of another hank, which, after the experience of a year’s working, are quite satified with. The expenses and interest charges pro rain to the business have been much decreased, chiefly by the purchase mentioned, also by the disat pearanee of the £1.500,000 'estates Company’s debentures for which 5.V per cent, interest was paid, and about .£300,000 Auckland Ag:icultural Company’s debentures which cost 5 per cor.. These debentures had to be redeemed at; a considerable but justifiable expense, which the Board had no hesitation in resolving to undertake. '! he finances of the bank, which

were in a disorganised state in 1894, took time to rearrange so as to bring about profitable working compatible with a position of strength and safety. The board have now the pleasure to assure you that, with the assistance of the Government <.nd the Legislature. the necessary arr .ngeinerts have been completed, and the desired p. sit ; on attained. I They are also glad to announce that adranI tage was taken to realise the consols, Colonial . Government-, securities, and other securities 1 held in London previous to the recent decline j in p’-iei-s, eo that no loss has accrued to this bank from that decline. As to resources, j besides our coin, cash balances, liquid money i invested in London, and bills of exchange, j v/e have now over two and a half millions sterling in Assets Board debentures bearing 31 per cent, interest, payable in Loudon and practically guaranteed by j the Colony, so that, come what may, | this institution will bo prepared to meet it. The present positi- n of the bank is that there are no known deficiencies unprovided for on annual balance days beyond those stated in the balance-sheets, viz., the items of goodwill, debenture conversion expenses and excess value • i promises, amounting altogether to about £150,600. The obligation to pay £5",000 annually to the Assets Board ■ prevents us from writing down these items, | but we trust that Yve may at au early date be

able to lessen it by appropriations from Profit, and in a short time afford dividends to shareholders on their capital cheated by the second call on the Scshrve liability. When it is considered that, by the measures taken in the past two years, you have—instead of a total loss of your reserve liability of £lO per share—lost only one-third of it, hnd have reasonable expectations that on another third you will receive dividends, while the remaining third may be said to bo still safer, I trust you will regard the position with relief and thankfulness. So far the interests of the Government and the shareholders are identical, and I hope they will remain so while each retain their proprietorship in tke bank. I wish shareholders to remember that, owing to the vast assistance the bank has had from the Colony, the bank must be for some considerable time practically in the hands of the Parliament, and it would be unwise, by inflammatory speeches or other ;vi?e, to provoke antagonism of any kind, as that would only bn ungenerous, and hurtful to the bank. The provision for the audit of this bank is more thorough and searching than that of any other institution known ; the reports to the Colonial Treasurer, while avoiding reference to individual accounts, are very full, and the responsibility thrown upon the Colonial Treasurer and his department in this connection is so onerous that you may rest in confidence as to the efficiency of the audit. 4 urning to the prospects of the Colony, with which the welfare of the bank is so indissolubly bound up. the present directors were more fortunate than their predecessors in taking office at a 'ime when things were at the lowest ebb. Since then a great and general improvement has taken place, in which the Bank of New Zealand has naturally participated. We do not take undue risks as icgards mining securities, but the exchange and deposits consequent on the flow ot capital into the Colony for miniag purpos es and the increased outturn of gold, have benefited us considerably. The increase in the prices of timber, wool and agricultural produce has also benefited us greatly, whilst in most departments of manufacture and trade the well-being of our customers has added to our security and profits. Cheapness of money is not always beneficial to banks, but in our case it is not an unmixed evil, as when money | is chesp and difficult to invest, we get the benefit of large surns left in current accounts not bearing interest. As a last cheering word. I may state that our half-yearly balance of 30tk September last has shown a satisfactory profit for the half year. I now move the adoption of this report and balance-sheet The notion was seconded by the Hon W. Johnston.

Mr T. W. McKenzie said that in the proceedings of the last few years the shareholders had been largely victimised, and they had been scarcely consulted in any way concerning the bank’s welfare. All their interests Lad been banded over to the Government. He thought the directors should have taken the shareholders into their confidence from the first, and let them know the position of the bank’s affairs. He did not think they should have borrowed the money in the way they had done. The fact was that the Government had too much money, and the bank, obtaining it at a low percentage, took risks which it would otherwise not have done. Looking back over the past years, he said that £12,000,000 of capital had been swept away, and many of the shareholders had been ruined. He would like to know what the contingency fund now amounted to ? He pointed out that Mr John Murray in a letter called attention to the fact that shareholders’ interests had not been attended to at all, and be (Mr McKenzie) thought it very wrong that shareholders’ interests should have been sacrificed to anybody. He should like to know how the bank’s balance-sheets bud been made up, and bow the shareholders were to get at the truth regarding the disappearance of the <£12,000.000, the whole of which had been swept away ? The interest of the shareholders had been brought down to something like ,£900,000, after taking away the reserve fund. This was a lamentable state of things, but bo hoped it would not turn out as bad as that, and he did not think it would. He hoped to hear that the contingency fund was still in existence, and that it wonld be used to the advantage of shareholders. He did not think much of what bad taken place in the House in regard to the bank, ’the fact was that the principal and pertinent questions bad always been bluffed. In conclusion, he remarked that the shareholders had been sacrificed by certain parties, and he feared the estates would be sacrificed by the Assets Board. He wished to say that the present directorate was not responsible for what bad happened.

The Rev C. S. Ogg said he would like to hear what the directors had to say, and what their future intentions were.

The President said he wished to reply to what Mr McKenzie had said with regard to the directors not having taken the shareholders into their confidence before approaching the Government. The directors considered that if they had dove that, the bank would have to close its doors next day. j\ voice : That would have been the better conr-e. The President, continuing, said if the bank had closed its doors the shareholders would have had to pay the whole reserve liability of £lO per share instead of the smaller amount they had been asked to pay. A Voice: It would have been befdcr to have paid the whole £lO in one sum than to pay it gradually. The President said the contingency fund provided was £200,600. and as far as the directors could ascertain the whole of that sum would be required; as to the £12,000,000 referred to by Mr McKenzie, that sum had not all disappeared. What had disappeared out of the balance-sheet referred to by Mr McKenzie was the £900.000 capital. the £'59,000. part of the call paid up, and the reserve fund of £l-5.000. The £12.000,000 represented the whole as-ets of the bank, most of which were there still, and included some of the best accounts in the bank. The bank had a representative on the Assets Board —a man in whom the directors had every confidence, and the estates were not likely to he sold below their value. Is fact the Government were likely to buy estates in the Waikato and elsewhere, which nobody else would buy. Shareholders need have no fear in regard to the realisation of the estates.

Mr T. G. Macarthy said the Parliamentary enquiry had shown that the present director’s of the bank had well represented the interests of the shareholders. The directors could nob disclose what they would do in the future. They should be allowed to conduct the bank's business, and then the shareholders could say whether they were worthy of their confidence.

Mr vY, Booth said the directors had not been indifferent to the interests of the shareholders. Prom the time the present directors had taken office they had spared no pains

to find out the true position of the bank, and to protect ihe assets remaining to the shareholders, and to take every means to resuscitate the bank and place it in a position of strength and stability. All the directors had regarded with feelings of profound sorrow the position to which the bank and the shareholders had .been brought by its losses. But this state of affairs had been brought about before the present directors took charge. Since the present directors had been in office they had practically made no losses for two years, and the decision of the Court of Appeal that day, in regard to interest on Colonial Bank accounts, would probably secure the Bank of New Zealand a further reserve to strengthen its position, amounting to between ■£30,000 and .£40,000. The banking enquiry had shown the details of enormous losses which had arisen during the last 10 or 15 years. The present directors had not taken upon themselves to measure out the blame attributable to directors or officers in the past. It was not their province to go into that. They had their hands quite full, in lace of the immense losses that had accrued, in restoring strength and stability to the bank. These losses had been largely due to depreciation in value of property, but they were also due to injudicious investments, and Ihe condition of things had been simply appalling. _ Comnaving the present state of affairs with that in the past, he thought the shareholders on reflection would say that the present directors had done a great deal for them. They had done more than at one time he thought it would be possible to do. Shareholders might now look upon the position of the bank as being safe. He viewod the future of the bank provided there was efficient and prudent management- with hope and confidence. There was no doubt some soreness felt »t the fiact that the directors had not, from the first, taken the shareholders into their confidence, but on the whole it must be admitted tbac a wise arrangement had been made, and one that must be 10 the ultimate advantage of the bank and the shareholders. He thought the time was not far distant when shareholders would receive 5 per cent, dividend on the call now made, and that the remaining call would rest in security in the shareholders’ pockets.

Mr T. W. McKenzie said it was very cheering' to hear such pleasing news from the president and the directors. He did not wish to injure the interests of the bank. It must now be regarded as a purely New Zealand institution, and he hoped it would be the means of doing good to very many people. He trusted the directors’ anticipations and cheerful words would do good, and set all shareholders in good spirits, and that the bank would flourish and realise all that was expected of it. The motion for the adoption of the report and balance-sheet was then put and carried unanimously. Mr Geo. Allen complimonted the directors and officers of the bank on the care, attention and zeal displayed by them in the management of its affairs, and said it would be ungrateful on the part of the shareholders if they did not tender them their grateful thanks. He had much pleasure in proposing a vote of thanks to the management and directors of the bank.

This was seconded by Mr G. M. Kebbell, and carried.

Mr T. G. Macarthy acknowledged the compliment on behalf of the directors and staff. He hoped the anticipations expressed there that day would bo realised. This concluded the business, the meeting having lasted about 30 minutes. A shareholder who had given notice of his intention cf moving a motion adverse to the President and General Manager wrote withdrawing the motion, as he considered that the result of the Parliamentary enquiry had been to show that the gentlemen mentioned were in no way to blame.