THE BANKS' AGREEMENT.

Otago Daily Times, Issue 10495, 19 October 1895, Page 6

THE BANKS' AGREEMENT.

(Per Ukited Press Association-.)

Wklhsgton, October 18,

The following is a copy of the banks' agreement laid on the table in accordance with the provisions of '< The Bank of New Zeiland and Binking Act 1895 " (certified as a correot copy of the original agreement by Mr Jas. B. Heywoocl, secretary to the Treasury) :—

, o Aa agreement mftde tD'3 18th da 7°f October 1895 bstwwn tho Colonial Bauk of New Zealand (hereinafter called "the s»lliu» bank") of the one p»rt and the B»nk of Naw Z««l»nd (hereinafter called " the purchasing bank ") of the other part, whereby it is agreed as follows : —

1. Tha selling bank agrees to sell and the I purchasing bank agrees to purchase the busines« j and aißets of the eelliog bink, except the ! uuciUed capital and reserve liability of sharj- I holders and the assets and dtbu mentioned in.! a certam list marked •' D,» which has been prepared and is identified by being signed by ' three directors of the selling b>uk and th 9 purchasingbank reipsctively, and exespt alsa as hereinafter mentioned.

2. Thebosraeas and assets of tho sailing bsnk, M disclosed in itsbaUnee sheet hereinsf tcr mentaoDci, a copy of which tnlancs shee' has biea fignsd by such directors as aforesaid, should, for tho purpose* of thi» agreement, bs considered as the basii of the contract eutared into between the said parties. 3. For the purposes of this agreement the iV^™? 6.? ° c"nsidc«I t'on is estimated at £.461,411, but from this gum shall ba deducted" by the PurchMi°B bank the sum of £3^7,305 as sscutity peudiog tbe taking over realisation, or adjmtmeut of the accouuts in the •' B and "C " lists loiptctWely a « hereinafter mentioned. The sum of £133,903 shall ba paid in cash by the purchasing bank through the selling bank on the ratification and approval of ton abetment as hereinafter. 4. Three lists of debts and accounts have bera prepared and marked respectively "A," "B,' and "C" lists, which are identißsd by being Bigned by such directors as aforesaid. >< a»T^° debts aud accoants mentioned ia the A list shall ba taken over by the pnrchisinjr bauk as of tho value get opposite to the aim" respectively ia such li»t. 6. The said sum of £327,305, part of tho said purchase money, represents sums in therifihthand columns of the scid "B " and "C" lists a» margioal tumi do be held by nay of security jjeadrog ths taking over, realisation, or adjustment of the accounts in the said "B" and 0 lists naptotively, and shidl, subjsct to the provisions hereinafter containad, be retained by tne purchasing bank for such purchase ..tV"^* 8?* 3'5 *nd a>°<" mentioned in thasaid D list shall not pass under this Agreement or bf come tbe property of the purchasing bank, but shall remain the property of tho sellioe bank. "

8. The bminess-and the asßets hereby agreed to be .old shall t» retailed by the selling bank up to toei date hereinafter (lied for the tran»fer of the said brniawt and as from tie 31st day o. H»y last in London, and a. from the3lgt day cf August last in New Zealand up ta luc { date bo filed the selling b»bk shall be deemed to have been and to be carrymg on bn'sines* on bthalf of the pcrchaiing b»nk, and shall awordiDjjly account to the purcbaiing bank for all benefits reseivtd, aad be indemnified by the purchasing bank against all liabilities, obljgv tions, and expe&iws (unless arising from the wrongful or negligent act of the selling bank or its officers) incurred in carrying on the businejs ol tne bank. All rates, taxea, and fire insurance premiums iv respect of the premises and assets hereby agreed to ba sold up to the eaid Slot day of August last Bhall be discharged by the soiling bank, and thereafter by the purchasing bank, and all such rates and tax«s and premiums shall, if necessary, be apportioned 9. Ihe purchasing bink shell manage, r, e* % , »djn«t the ecoounts mentioned in the " B " aud " C " lists respectively under the sapervision of the selling bank, to whom monthly returns fhaU be furnUhed by tha purchasing bank, and.no increase of indebtedness shall be allowed in respect of any such account except by mutual agreement between tbe soiling bank tiid purchasing bank; but if any soch indebtedness is increased by mutual consent, the Balling bank, it required, shall provide a iurtner guarantee to' secure such increased indebtedness, and if the porcbating bank shall allow any increase which may nob be so mutually agreed upon, such inorfi»s ß of indebtedness shall ba at the sole risk of the purchasing bank. 10. The purcbaiing bmk shall bs entitled to apply any snrplus srisiag from any of tha Baid marginal .urns in the " B " list in aid of any deucierocy which msy arisa in. any accounts in euch list until the whole of such accounts in such list »h«ll have beeu takea over, liqaidated or adjusted. There sbaU be no liability 0Q tho part of tbes*!liog bank to tho purch»sin< h&nk beyond the said marginal turns in r<sptcfc of the Siid accouate or sny of them. 11. If tbe selling bank shall couaider that any steps or proceedings are necessary for the protection of tbe said accouate, or auy of them in the eaid "B" and "C" lists respectively, tna purchasing bank shall, on rteeiring written instructions from toe selling ba&k, telie such steps and proceedings, but at the rick and exofnse of the selling bank, . 13. If the purchasing bank shall represent to the selling bank that any nccoaut or scbannts in the " B " list is or are in ita opiuiqu becoming bad, or m the event of a customer failing to pay interest on any Buch account, the purchasing bank may require that such atcount or account* shall be closed and realised after OUB month's notice to the selliog bank; bob the selling bank shall have the option of withdrawing snch account from tbe asssta hereby sold on paying to the purchasing bank tha amount then due thereon, and thereupon -the amount standing opposite such acconut iv the righthand column shall be paid to the s«Uieg bank • and in the event of the telling bank dtcHniuK to exercise such option within such mouth, then tie purchasmg bank may deal with the same in such manner as it thinks fit. 13. If at any time on the rendering o{ the monthly accounts or returns aforesaid^ shall be foond that the total amount sUndiog iv th" right-hand column of the '< B " list shall exceed the total amount of-debts to which they stand opposite in such list, tben, and bo often as th« same shall occur, such excess of tho total amount in such right-hand cslumn sliall ba psid to the selling bink. ■ thWi «"> expiration of mx monlfi, from the date of tho tionsier of the said business and on the expiration of evorr sis months thereafter, a statement shall be prepared by the Dnrchasing bank and furnished to the eelline binfc of Bnch accounts in the " B" and " C " lists as may hare bean taken over by tie purchasing bank, liqaidated or adjusted, m also a statement of the position of the junonnts in the said r if;tit-band column of tbe " B " list. 15. An equitable adjustment nhall ba made of tha interest due to and to b» flowed to ths selling bank ou any amount standing in tho said right-hand iioluam of tha eaid "B" list which may ultimately be found to b? in tjcoes, of the amount necessary for securing the d"bks mentioned in the said "B" list, and the rate of such interest shall ba based on th« current rat« of mt«re«t for fixed deposits for 12 months paid by the purchasing bank. .. l6 4 1 Aftf c*uo "xpiratibn of two years from tne 31st of August last, the selling bant may requite the purchasing bank to ps-y over to the spiling bank tho whole of the amounts in the ngbt-nand coluara of the said "B" list, and -surrender.»U securities held in respect of the debts oraecounto mentioned in such list on payment oi th? total amount of tbe balance then

owing on such debts, or accounts, bdt the patties hereto may arrange from time to time to continue the liquidation of any of the accounts mentioned in tha said " B " list tor a further term. Iv the absence of any such arrangement the purchasing biuk may proceed to liquidate all or any of the accounts mentioned in the said "B'MUt.

17. The purchasing bank shall sot so long as it retains any part of the said marginal sunn as security as aforesaid realise or dischar'ga (excapt in payment). any security held by the purchasing bank for or in respect of snob, accounts, nor realise or compound for sucn, accounts without -the consent of the Belling bank. '. ■ ' '

18. With respect to the accounts appearing in the said "0" list, the selling b»nk shall indemnify and protect the purchasing bank agaiott any loss or dtfisiency on the realisation of such accounts respectively, provided that the purchasing bank shall, immediately on this contract taking effeev, write off tho amounts Ending in the right-hand colnmn of the " C " list and credit the respsctive accounts in such list with the amounts so written off/ The purchasing bank shall have the option within three months from the d»te of this contract taking effect to taka over all or any of the eaid accounts in the said " C " list, and in the event of the purchasing bank deciding to t»k« over any such accounka tha selling bank shall st»nd released from \ts agreement to indemnify and protect a 8 aforesaid. Tho selling bank may at any time require the purchasing bank to elect whether soch bank will tike over all or any of the accounts in the " G " list or reject the name, and in the event of the purchasing bank refusing to take over all or aDy of such accounts the selling b^nk shall be entitled to take over the account or accounts respectively, or require the purchasing bank to realine or liquidate tile account or accounts which the purchasing bank refuses to tike over, and any deficiency arising on such liquidation shall be made gcod by the selling, bank. - ..

19. The assets agreed to be Bold as aforesaid ehall be subject to all tenancies, lien?, and equities subsisting or affecting the same or aay part thereof.' ,

20. The purchasing bank shall pay, satisfy, and di6cb.arga all deposits, bank notes, credit balance!, bills, drafts, letters of credit, acd circuUr notes for or iv respect of which the selling bank nhall bo liable, and which are disclosed in the selling D»nk's books at tho tiraa appointed for the transfer of the business of the selling bank, and shall also pay and .satisfy all liabilities and obligations of the selling bank incurred or undertaken in carryiug on its ordinary business and winch shall be disclosed in the books of such bank, bat nevertheless without prejudice to the provision contained in the next clnnne, and alto will from time to timn pay the rents payable, and obterve and perform the covananta and conditions to he fulfilled or ob«sved by the selling bank under any leass or tenancy held by the sailing bs.uk and agreed to ba sold by it. But nothing in this rl-.U99 contained shall' render the purchtsing bank liable in respect of any contract enterad into by the telling bank with any of its officers or servants, or for auy lorn arising from the improper conduct or neglect of any of ancb officers or servants. • 21. Notwithstanding anything contained in the last preceding clause, the selling bunk shall guarantee the purchaoiug bank against all lo;a which it may sustain in respect of any letter* of oredit granted by tha selling bank 'prior to tha time o£ the said bnßines» being transferred; but the purchasing bink shall elect, within U days thereafter, whether it will stop or continno any credit in respect of such letters or any of them after the expiration of soch 1\ dare. The liability of the selling bank under this clause *U*U cetsc and determine- in respect of any operation thereafter on any such letters of credit. .

22. A list of the officers and servants of the selling bank shall be furnished to the purchasing bank, and their names shall be placed on such bank's register of applications for employment, and sa many of suoh officers and servants shall be taken into the employ of such l«strooutioued bank as the exigencies of the interest thereof may rcqnire. 23, The purchasing bank shall be entitled at any time within six months from the time appoint© ] for the transfer of the said business to rejeot any tecurit'es which it m»y comidor contain onerous conditions.

24. The selling bank shall, if a written request in that behalf ba made to it by the purchasing bank within nine months from the date appointed for the transfer of the said holiness, at the cost and charges of tho selling bank, complete any incomplete security (according to tho nature of the i eourity intended) for any of the a«sets sold and purohssed a« aforesaid, and in the event of the selling bank negleotfog for a reasonable time to complete such security, the purchasing bank may do so at the cost of the sailing bank. .25 The telling bank shall guarantee (a) that tho balance, shett made up to the 31st day of March in London, and up to the 31st day of August last in. Now Zealand contains a true .statement of the position of the selling bank at those dates, except as any variation thereof appe»rs in this agreement. (A) That all items (not included in the "A," "B," ana "C" lists, and: any securities held for ithe accounts therein) submitted to the purchasing bank during the negotiations for the sale aud purchase, Me;of- the valus which they were represented to be ; bat the landed property and bank premises appearing in such bslauce sheet shall be taken at the values appearing in the said balance sheet. Tbe furniture aud stationery mentioned in tho said balance sheet, after dedurtiDg sn allowance in respect of working the biixiness iv London, has been assessed at £6550. (c) Tbe accounts in the "A" and "B" lists tiken over by the purchasing bank wh-ch have not in the meantime been paid off or reduefcd shall at the time appointed for the Iret'sfer of the business be in a Bafe or substantially good position, having regard to Uks nature of the accounts and the cireumstancss of the dnbtors as they were respectively in on tha olst day of August la*t. (d) That the items showo in the balance sheet as being in transitu, between the various branches of the selling bauk are of the value which they were represented to be in such balance sheet, (c) If any account taken over by the purchasing bank shall be wholly or partially secured by shares of the selling bank such last-mentioned bmk shall make good any deficiency which may arise in realising any mich security to the extent which siieo security was estimated in taking over snob, accounts or any of them (/) That the selling bank will, if paired by toe purchasing bank, within six months from the time when this contract takes efteat, make good any "defeat ia the title to all or any of the assets cold, which hive been represented to consist of freehold land belonging to such bank as its own property aud not held by way of security only; and as to leasehold properties, that all rents have been paid and all covpui.ii* pf rformed iv respect thereof up to the 31st of August last. If the selling bank is unable or unwilling to made good any suoh deffct in title within a reasonable time after being so requested so to do as aforesaid, compensitiou »h»l! be allowed to the purchasing bank for any deßeitncy1 in value of any, freehold property prejudicially affected' by any such defect iv title, such compensation to be settled by arbitration in case of disagreement between the parties hereto as to the amount thereof. 26. Agency work ia connection with the liquidation of the selling bank tbaU bf) undertaken for such bank: by the purchasing bjnk free of expense, excapt suoh charges as the purchasing bulniy actually pay ia respeot thereof, butrsuoh lr.stmentiojed bank shall not be under obligation to carry out any agency work ■which it may consider detrimental to its own badness. 27. There shall bs excopted from the said ooDtract : for s»le the share register, traasfer booki, board minute book*, transfers of shares, and other documents relating to'the ownership of shares in the selling bank, and also it« soal, all of winch shall remain the property of the selling b*nk. All other books of, the selling bank shall become . the ' property " oE' the purchasing b*nk, but until the dissolution of the selling bank the purchasing bank «ball produce aud show at such times and to .such persons an the selling bank shall from lima to time reasonably require such Docks, document« f and- papers of the selling bank pausing to the purchasing bank, bnt the selling ■ bank shall pay any actual onjluy occasioned by such production. 28. It is agreed that tha selling bank shall guarantee the due payment of all amounts pnyable under or in reeptet of any security mentioned in the memorandum at tha foot of the said "O" list as using bold by the purchasing bank and given or excoutcd by any person or company whoeo name appears as 6 debtor in the said "C" list. Bat tbe said sellmg bank shall bo entitled at any time to pay off and take a transfer of all or any of the said recurities.

29. Subject to the payment of tha said sum hereinbefore agreed tb'be-paid in c&b, tho trmo or d=*e appointed for tha transfer of tbe busiuess of the seUit/y bank snail be tho second Monday after tile ratification nod approval of this afc-reameut as provided by "Tha Bank of New Zw.land and Banking Act 1895." 30 If any difference shall arrwi between the sslliog bunk and the purobxfling bank tounhiog these presents or the eoostruction thsreof, or auy clause or tiling herein contained, or any matter in any way connected with the'o preiontjt, or the rights, duties, and libsrtici of eir,hsr party in connection with the premiteo, then and in either or aoy such case thu ma'otar m diSerente shall bo referred to two arbitrators to be »i/poiated by, each of tho pittiei iv difference or. by an umpire to ba appointed by the siid arbitrators. '

.31. The expression "tU^ Belling b»nk." or auy words importing the some meaning, sh*ll extend to and include, iho liquidator or li<jui3alori for, tho time baing of the goUiuc

32. Tins agreement for the sale and purchase as aforesaid is conaitiou.l uuon (o) the subreqnent ratification tbereof by reiolutlou p« Bfi d by the.proprietor* or, shareholders of «S,i inß, bt? k m ihe man «er i>rovid«l by Ihe B.nk of Now Zoaland nnd B»nhins Act

1895 " ; and (i) the approval of the Parliament of New Zealand, to be flignißed as prescribed in the last-mentioned act. In witness whereof the Balling bank and purchasing b»nk have caused their respective common 6eals to be «ffir.ed to this agreement, writtea on 15 sheets of paper, each sheet of which baa been nigned by three directors of such banks respectively, the d»y and year firstly hereinbefore written. The common seal of the Colonial Bank of Now Zaal&nd was hereunto affixed by authority of the board of directors of Buch bank in the presence of H. Mackenzie ..(geueral manager), George M'Lean, William H. Reynolds, W. Downie Stewart. The common seal of the Bank of New Zealand was hereunto affixed by authority of the board of director* of such bank m the presence of C. G. Andrews (acting general m&Dftger), W. Watson, Walter W. Johnston, William Booth (directors)

(FBOM.OUB ChvK COBBESPOHDZNT.)

Wellington, October 18.

At last the banks' agreement is in the possession of members, and it goes without saying that they will be much exercised in their efforts to fully appreciate its meaning for some days to coma. For my part it strikes me at first sight as being about as carefully constructed a document as tho famous, but happily, abortive agreement of last year, and many will think thay recognise the prasooce of the enroe strong brain and skilful hand in both documents. An the sgrconsnt has only been circulated within the last hour members are necessarily not yet disposed to express opinions for public»tion, but I found Sir Robert Stout ss usual master of tho facts, and at my solicitation willing to express his views ot the transaction. Here itis:—

What do you think of the banks' agreement, Sir Robert ?

Let me Qrst say it is impossible to understand tho agreement, more especially in the absence of list " D," whica is specially referred to in the agreement. In ray opinion. the set has not been complied with, becauss the full agreement has npb been laid on the tabie of the House. The Home does not know what hos been sold uuleai it sees the list " D." List "D " and lutj "A," "B," and "0" itre incorporated in the agreement, bat they have not been laid on the table with the agreement, and in their absence the law his not been complied with, became only part of the agreement has been laid on the tftble. Toen, again, undsr the act the Bank of New Zealand can only bay the &esct» of a bank that are good. AH aiset» that are bad, doubtful, and valueless in the opinion of the auditor of the bink cannot bs purchased. Now the agreamest admits that the ass«ts ia the lists "B" and " C " are doubtful, because they hold £327,305 against them, and this sum is not to be paid until realisation, and thero is provision consequently for deduction from the purchase money of the amount which these lists may not realise. This seems to roe contrary to the statute, and I do not think th« agreement is valid, and that it can only be made valid by a statute. The whole of tbn clauses of the agreement from 9 to 19 assuma that the properties and assets in lists "B" and "C" are some of them—doubtful, and they cannot, in my opinion, be purchased by tha B*nkof New Zealand. There are other terms in the agreement wh:ch show that' the Bank of New Z«al»nd is taking over securities and properties that may not realise their face value, and that it knows it i« doing so. To a«k the House, under the present agreement, to exoresa any opinion would bo the veriest faroe.

What do you understand by the guarantee mentioned in the agreement ? I preoume you refer to the guaraotea in clauie 28 ? This only emphasises what I have alreidy said—that the Bank of New Zealand sesames thatthe accounts in list "O"are not all Stood. It will also b3 noticed that the Colonial Bank is not to be wound up immediately. That is to prteerve the guarantee, to the Busk of New Zealand.

Does the agreement disclose that there is any amount p»id for goodwill P Tho agreemont dots not disolosa that, but one m*y draw the inference that then must have been a sum paid for goodwill, becwise there are first the asset* in the lists " D " that aranot sold; then tbe assets in the list "A," " B," and " C," and which the Bank of New Zealand has to pay, amount to the full capital of the bank and about its reserve fund, as'l understand the capital of the bank is £400,000 and the reserve fund about £70,000, and there are some pro3ts ia hand Now the Bank of New Zealand i« to pay £461,211. It is true it only pays £133,996 in cash, and holds the balance of £32?,305 till it sees how lists " B " and "C " come out.1 This shows that the purchasing bank mu«t have paid something for tie goodwill.