NATIONAL BANK OF NEW ZEALAND.

Otago Daily Times, Issue 7344, 29 August 1885, Page 4

NATIONAL BANK OF NEW ZEALAND.

The thirteenth ordinary general meeting of the shareholders of the National Bank of New Zealand (Limited) was held on July 15 at the City Terminus Hotel, Cannon street.

The secretary (Mr It. Maxwell) having read the notice calling the meeting and the minutes of the previous meeting, the report and accounts were taken as read.

Mr Edward Brodie Hoare, the chairman of the company, who presided, stated that last year he occupied the chair merely at the wish of his colleagues. Since then, as they had been informed, Mr Magniac had thought it necessary to resign permanently the position of chairman owing to ill-health, but ho still remained on the board. His colleagues had now been kind enough to ask him (the chairman) to take the chair 01 the bank, a position which was not a very easy one, and ho should have to crave the shareholders' indulgence if hu was rather longer than visual, but his object was to tell them everything. It had been the custom generally to take the accounts as published and go through them more or less in detail, and to show any remarkable fluctuations. On this occasion he thought ho need hardly do this, unless the shareholders particularly wished it. He had a comparative statement before him, but the fluctuations in the ordinary figures were so simple, and of such very minor importance, that he did not think he need trouble the meeting with them. The only really important change which they, no doubt, all had noticed as one very much in favour of the bank's financial position, was, that they I showed hero a holding of £198,000 odd in consols, Colonial, Government, municipal, and other securities. Those were held on this side. They were held last year, and he informed them, perhaps some of them remembered i 6, that they did hold such investments, but the amount there, as he ventured to think, by an error in judgment, was not shown; and it was in -this way : the directors were all equally responsible for it, but the amount was overlooked, and not put into actual figures. The other items really showed very small changes. They were of very small importance, none of them exceeding £20,000. The profit and loss account would be dealt'with separately. While he was on this subject ho thought it right that he should call especial attention to the very strong position that the bank was in, in the way of having its resources well in hand. There was £309,000 of coin and bullion and cash at bankers, and J* 1.98,000 in perfectly good securities, which made £507,000 which they could ~lay their hands on at any moment. That was a position that any bank might confidently trade upon, anci that should give confidence to their

depositors and to their shareholders, and there was not the slightest necessity for any call being made. The bunk had ample funds to meet every possible liability. Ho might also add that through the kindness of their bankers their inspector in New Zealand was armed with a very large credit, of which he could avail himself at iuiy moment, in case of any distrust in thu bank. Hu could draw on a bank which if he (the chairman) were to name it, he hoped they would say was not one of the least strong bank.-; in London; bub not only that, the company's credit all round was such that they iit?«d have no fear of any temporary pressure even incynveijlencing them. They had had, however, since the issue of the report no sign of even any temporary pressure; he was sure that it would he gratifying to the shareholders to feel that their credit and the board's credit was such that of all the deposits falling due since the issue of the report, the greater part had been renewed for periods of years. The depositors were perfectly right in doing so, when they saw -the large uncalled capital of the bank and its report, and they ran no more risk than if their money was in the Bank of England.—(Applause.) The shareholders would of course like to know what it was that had brought about the payment of no dividend, which no doubt had caused them a good deal of alarm. They might remember that at the last meeting, partly in his speech and partly in reply to questions, he told them that there wei'e certain accounts which caused the board anxiety, and that, they had written off all ascertained bad debts, but that there were accounts which caused theni anxiety, and which might, and 'probably would, result iv a loss ; but it was impossible to say when or in how many years, if ever. Last year lie informed them that the board had made a private provision in the bank's books against probable losses, which provision he did not give them on account of. That amount was rather over £18,000. When they made up the bank's figures at the.end of the year, to March 51, they had a net profit iv hand, according to their showing, of £18,000, which, with the £18,080 they had last year, made £36,000. They had also in hand that, miserable £10,000 which had stood to the credit of the reserve fund for so many years, and which made a total of £46,000 ; but from that had to be deducted sundry items, and, among others, a large provision of over £7000 for the depreciation in their consols and their securities. These had to be valued at the date of Blarch 31, and they showed a loss on that date of ovar £7000, a loss which was written off iv their bank's account, but since then consols^ having recovered, a considerable part of that loss had been recouped. They also wrote to the inspector that they wanted to have, as fully, as possible, a return of all those accounts on which doubt had been thrown. He (the inspector) sent them back a document of which he (the chairman) would give them the round figures. The amount at stake, the inspector told them, on those accounts was £131,000, that he estimates! the loss at £94,000, and he recommended the board to write off £90,000. This was a somewhat startling recommendation, and one which did not commend itself to the directors. I They caused those accounts of the inspector's to be divided into three heads—viz.: debts absolutely bad; debts on which the inspector had seemed to be justified in expecting a loss ; and debts on which the inspector thought a loss was possible, but was so doubtful that he did not estimate it at any amount. The amount that the board calculated to be totally and irrecoverably lost, without any further hope of recovery, and no securities against it, was £20,733; but they had over £18,000 in hand and £18,000 to" profit, so they had ample funds in hand to meet it, and they wrote off that amount of £20,733. It was the course they had always pursued, and they pursued it on this occasion. That left them with an estimated deficiency, if the securities were'realised at the present time, which was one of very great depression, of £70,000, against which they would have had the reserve fund and the balance of the profit and loss account. This was manifestly inadequate, and in looking through their books they came to the conclusion that in putting the total of £131,000, which was the total gross amount of the inspector's estimate of debts at" stake, the directors thought that having a deficiency which their funds in hand would manifestly not meet, it was better to make one bold stroke of the matter, tell the shareholders the whole story with all the figures, and ask them to enable the board to make a full and sufficient provision to meet every possible contingency; and when that was done, the directors, the shareholders, and the public would be able to see that they had aper- | fectly clean balance-sheet; and that they had | not an account in their books which they did not honestly believe to be undoubtedly good. That was the position which they wanted to.put this | bank in; but {hat could not be done without undergoing a somewhat disagreeable process, which he proposed to tell them, though not to ask their sanction to that day. If his proposal were accepted, the business henceforth would be a good and sound one, and they had no reason to suppose that it would not earn a good profit—a profit which he thought they might safely estimate at from £25,000 to £30,000 a year. ' •

The course they had taken to prevent the recurrence of these mistakes was that they had appointed, subject to the confirmation of the meeting Mr Edward Pearce, of Wellington, and Mr James Rattray, of Dunedin, to act as directors out there. They were both wellknown gentlemen, sound and prudent, of good means and high position, and of great experience in New Zealand. As their inspector they still retained Mr Dyinock; he was thoroughly loyal to the bank, and knew and understood from personal intercourse the wishes and feelings of the board. The board had now made arrangements by which the expenditure would be very materially reduced.—(Hear, hear.) As they were all no doubt aware, Mr W. J. Steele resigned his position as general manager, and the board had thought it only clue to him and in the interests of the bank that he should be nominated by them a director of the bank. By this process his knowledge of the business was retained in the service of the bank, and his whole salary was saved to the shareholders, and any remuneration that he was to receive, together with that of Mr Pearce and Mr Rattray would come out of the pockets of those who were directors before them. The directors had determined to ask the shareholders, in order to put the bank on a sound and unassailable position, to allow them to take £100,000 from capital account and transfer it to a contingent bad debt account. If this money stood in capital account, the board could not deal with it, and if the shareholders would consent to its being transferred to a contingent bad debt account, that account would stand at a figure of something like £118,000, which the board believed to be ample for every possible or probable emergency, and there would be no reason then why good dividends should not be paid on the reduced capital, which would stand at £250,000. They would have also to transfer the £10,000 from reserve to the contingent bad debt account, and they would then start with a clean sheet and hope to pay large dividends, and add steadily to the reserve fund. That proposition would not be made then, but at a subsequent meeting which would be called for the purpose. The board did not consider that anything else would be adequate to put the bank above the possibility 'of suspicion. He begged to move, " That the report and accounts be adopted and entered upon the minutes." Mr Dudley Robert Smith seconded the motion, which, after a short discussion, was carried unanimously. ' The election of Mr E. Pearce and Mr J. Rattray as the directors of the bank in New Zealand was confirmed. Mr W. J. Steele, the late general manager, was also appoiuted a director, and Sir Charles Clifford and Mr William Smellie C4rahame were re-elected directors. The auditors, Messrs Quilter, Ball, Crosbie, Clegg, and Welton were re-appointed. The meeting terminated with a cordial vote of thanks to the chairman and directors.