BANK OF NEW ZEALAND.

Otago Daily Times, Issue 10636, 30 October 1896, Page 2

BANK OF NEW ZEALAND.

(Pbk United Press Association.)

Wellington, October 29.

The annual meeting of the shareholders o£ tho Bank of New Zealand was held this afternoon, Mr Watson (the president) in the chair, .About 20 fchnreholde-rs were present.

The directors in their report Earths!; during the year the business of the Colonial Ba:ik was acquired and brandies taken over and established at Ashurst, C»mpbslltown, North Cromwell, Bluff, Elthara, Kusotuuu, Kurow, Ophir, South Dunedin, and W*. Uathaua ; and closed at Amberley, Fairlie, Geraldine, Otahnhu, and Pukekohe. The balance sheet for t,bo year ended the 31st of Much 1896 Bhows a net pr&fit of £52,192, bat which, ou an amended adjustment by the colonial.auditor, and since approved by the Colonial Treasurer, was reduced by £12,492, leaving a balanco to the credit of profit; and loss account of £«,083.

The President said: The balance Bhe;t aa on the 31st of March 1696 has; been circulated amongat you, and is the same as that laid on the table of the House of Representatives on the 196h of June, with the exception of the Dunedin adjustment referred to in a note at the foot, which reduce)! the balance at' the credit of profit and loss account by £12,492, making it now £40.083. The board had nothing to do with this adjustment, tho matter being entirely in the h&nds of the Colonial Treasurer and tho auditor of the bink as provided by the act of 1895. The total net profits of fcho bank for the yesr ended 3lst March last, after the payment of dividend on guarantsed shares or stock, before making provision for bad debts bat deducting the £1?,492 just mentioned, were £96,201. Out of .this sum bad debts wera provided for to the extent of £56.501, leaving a balance of £39,700, which, added to £383 carried forward last year, makea £40,083 available. Bad debts written off consisted mostly of dregs :of tha Australian business,which the board, p.ftor the most careful inquiry possible, found it advisable to provide for". According to section 11 of the Bank of New Zealand and B.inkin!; Acfc of 1895, the directors have to appropriate the balance of the profii and loss account as follows :—Dividend at 3£ per cent, per aunum on £.500,000 preference Ki.sMfs from Us January ta 3lst Mnrcsh ISSG, £1375 ; payment to Assets BenliK&fcion Board, £35,708 175—£40,033 17a. I therefore >:ow report to you that this appropriation will at once be msde. Owing to the .voluminous information mane public by the receut parliamentary committees we daem the present a fitting time to place before you succinctly th« position of the bank as it was when the presont board aianmed control two years ago, what has been doae in jour interests sines then, and the position and prospscta at preseut. On the 17th October 1894 I reported to the Government that of £11,000,000 noraiual assits ouly £5,481,000, or laso thim half, wero profit-pro-duc:G£, more than bf>.lf b^ing dead money— thai is, money so invested as to bring iv no income whatever. Ats Uisi time the liabilities on which the bank had to pay interest were £6,300,000, and in these circumstances it will ! fcurp/isu no one to kaow that the institution } was being carried <m as a. \om. It is practically i responsible for £4.40 C,OOO on account of the ! Bank of New SWiand Estates Comnsiiv and j tho Auckland Aguealtural Company," a:id bej tiween the bunk and these companies fchsra ware I s.bont £2,300,000 assets, which wm only j nominal money, bsing actually iireJovei-ablp. I need hardly depict; what would have been I the efeot had the business bean allowed to go into liquidation at fiat time. So far as tfeo shareholders were cunaerned, the whole of the capital and resorva liability would nudonhtarily have gone to meet the ascertained deficit.; and as to the further lo<s which would have accrued to the ca'.ony and those eoncsracd ia the bank's buaiuess from liquidatian in such r. ye?.r of depression »5 1894, is can ouly bs cou-jscsui-ed. That it wuulil have been he»vy admit* of no doubt. Wuat has been demu sintra 1894 in yoar interests, and in the interests of the colony and thajs concern*^, ttmy be briefly stated as foltowg :—An ectirn separation has bean effected hslween the bulk of the j assets of the 'Estates Company and tie bant, letving oniy the residue in the bank's baud fur speedy realisation—a residue so small t'lat no danger to Ihe bank can possibly accrue from it. At March 31; 1895, this residue, which included valuable trading concerns snd other assets, written down to the latest values, amounted to £534,939. This sum h« sioco been reduced by £117,392, received on account of realisations, nud we &ro in treaty riow to effect further sales. The kink's stability being placed beyond doubt by this sapar&tion- end by rise issue of Government preference shares, and the receipt of the Astets- Rea.lisaii.ln Board debentures, a reserve fund of £23,418' has been created. The earning power has been increased by the purchase of the business of another bank, which, after tho experience of a years working, wo are quite satisfied with. Bipemes End i'itercst charges pro rata to business have been much decreased, ciiifiiy by the purchase mentioned ; slop by tha disappearance of £1,500,000 of the Estates Company's debentures, for which 5£ per cent, interest was paid, aud about £300,000 of the Auckland Agricultural Company's debentures, which coat 5 per cent. These debentures had to ba redeemed at conxiderahie but justifiable expense, which, the board iiad no hesitation in resolving to undertake. Tha finances of the bank, which w«e in a disorganised state in 1894, took time to rearrange, so as to bring about a 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 and the Legislature the nscesaary arrangements have been completed snd the desired position attained. Thtiy are r.':so g!ad to aunonace that r^vdutage was ti»k<sn to realise on the consols, .colonial Gaverumenfc 'securities, and other securities held ;n Loa-, dosi previous to the receac decline in prices, so thai no loss has occurred to this hank from thai decline. As to veuources, besides otir coin, cash bilatjces, acd iiqaid money iuvestsd ia London and bills of escl".a:ige, we have now over two and a-UaH millions BtarliGg in assets, fetxirA dsbeaturfis bearing 3i pur ceut. interest, payable ;n London aad practically guarnuieed by t';c colony, so that come what may this institution will be prepared to meet its liabilities. The present position of ths bank is that there are no known deficiencies unprovided for or. the annual balance days beyond those stated in tha balance sheets—viz., tha items of goodwill, debenture conversion espoate?, cad the excess vulu'j of the premises, amounting altogether to about £150,000. The obligation to psy £50,000 annually to the Assets Bos.rd prevents us iron; writing down theee items, but we trust that we m&y, at an early date, be able to leseen it by appropriations from prufibs, and in a shoct time afford dividends to shareholders on their ■ capital created by tho second caii on the reverse liability, acd wh«Q it ia coosidured thai:, by the measures taken in the 'past two ys-ara, instead of a total loss rf your reserve liability of £10 par ehara yon lost only one-third of it, M>d iiave re*ionable expectations that ou the oilier third you will receive dividends, whil« the raamning third msy be said to bs still sai'er, I trust you will regard the p»«iiion with ralief and thankfulness. So far the interests of Che Governmeiit and the shareholders ate iOentica!, and I hopa that they will rsaiaia so waile eaeli retain their proprietorial;) in tha batik. I wish shareholders tv r«member that, c-iviujf to the vast aasisiaune which the bank has bad from the colony, the bank must- ba for joms .cou'iderable time praetieaHy in the h&iidd of PurlituneuS, and it would be unwice by inflan-i----niatory speeches aud ot'jerwisa to provoko 'az.t&jjrt)&ifiQi of auy kind, as that would ODly be nugr.Terous andburtful to the bank. Tho provision for audit of this sank is more thorough «nd ssai-uhing than that of &ny ofch«r institntioa known. The reports of the Colonial Treasurer, while avoiding reference to iMividual accounts, are very frill, and the responsibility, whioh is thrown upon the Colonial Treasurer and his department in this coaneation is bo oatirouß, thiit you m«.y resi in confitioiics as to the efficiency of tho audit. - laming to the prefects of the colony, with witich the welfare of the bank is iudiseolubiy bound up,' the present directors wasa mote fortunata than their predecassors iv taking cfSno at a time when things were at their lowuati ebb. Siuca then a geoerhl improvement has taken placo, in which the Bank, of New Zealand has naturally paiticipatcd. We do i.ofc take undue raks as regards milling seciui ties, but exchange and deposits conssqu^tit on tbe flow of cupital into the coiouy for mininj; purposes aad tha increased oat-tarn of gold have ber.eEted us considerably. The inctease in tlw prvces of timber, wool, and agricultural produce has also benefited us greatly, whilst in most 0!' the departments of manuiaotare and trade Sho wo>l-being of orir customers has addod to our security and profits. Tbe oheapnssi of mousy is not always beueficiul iio bAiilrs, but in our case it has net been an unmixed evil, and wiien money ie cheao and difficult to invest we get the benefit of the Isrgs suran left in caxtent; accounts not bearing intßrnei. As « last oboeri«S word, I msy Btnto that our half-yearly baiance to 30th September has Bhown * (satisfactory profit for the half-year. Mr Wetson concluded by moving the adoption of the report and balance nIK-et.

Tu<j Hon. W. W. Johnston seconded the motion.

Mr T. W. M'Keiizie focprcs3ed tho opiaion UiitC shareholders of tho b*uk had been largely victimised in the proceedings of tho loss few years, and they had scarcsiy boei. consulSsd in any matters affaoting the bank's welfare. AD theic interests liad befiii handed over to the Crovtrnraant. He thought the directors Htiouiri Sixte taken iha shareholders into fchsir confidence from the first, Mid lot them know the true position of affairs. Ho did not think Mis directors should have allowed tho bank to suitor such p. groat loss by borrowing money as they had dono. The fact was ths Government had too much money, and the bank obtaining it at a lnw percentage took risks whioh it would not otherwise have done. Looldug back ovar the post years ho saw that 12 millions of capital hid been swept away, and many of tha shareholders had been rniuiid. Ho should like to

know what the contingency fund now amounted to. Ho pointed lout that Mr John Murray in his .latter to tho Premier called attention to the fact that, shareholders' interests had not been attstded to at all, and h« (P<lr M'Keuzio) thought it very wrong that shareholders' interests shoald have bacn uzcrificed to anybody. He should like to know how the bank's balance sheets had baen msde up and how shareholders wera to get at tha truth re-girding the disappes-rauea of the 12 millions, the whols of which! had bean swept »way. The interest of shareholder* bsd been brought down to something like £900,000 after taking the whole of tha reserve fund. This wan a lamentable state of things, but he hopad it would not turn out as bad as that. He did not think it would. He hoped to heur that ths contingency fund was still in existence, and that id would bo nsed to the advantage of shareholders. He did not think much of what had Uk*n place in the Hou3B in regard to the bank., Tha fact was that the principal and pertinent questions had always bean bluffed. In concluBion he repeated that the shareholders' interests had not been looked after in the way they should. They had .been sacrificed _ to the interests of certain parties, but he wished to add that the present directorate were not responsible for this.

The Rot, O. S. Ogg said he would lika to hear what the directors had to fifty, and what their future intentions were.

Mr Watson aaid he wished to reply to what Mr T. W. ffl'Kenzie had said wita regard to the directors nut having taken shareholder* into their confidence before they consulted the Government. The directors considered if they had done that the bank wonld h&va closed its doors n*xt day. Several shareholders interjected that would have been tbe batter course.

Mr Watson (continuing) said if the bank bad closed shareholders would have had to pay a £10 o&U instead of the smaller amonnt they were staked to pay. A shareholder remarked that it would have been better to have paid the whole £10 in one sum than to pay it gradually.

Mr Wateon (continuing) u*id the contingency, fund amounted to £200,000, and as far as the directors could ascertain the whole of the sum would be required. As to the 12 millions referred to by Mr M'Senzie, he (Mr Watson) said it had not all disappeared. Wbat had dia-uppe-ired was £900,000 of capital, £450,000 of the ca!i of 1895, and the reserve fund of £4-5,000. The 12 millions represented the wholo assists o.f the bank, some of which remained thsro still, and included some of the bi-s5 accounts in the bank. The bank had a representative oa the Assets Board, a man in whom the directors had every confidence, and the estates were not likely to ba uold below their value. In fact the Government were likely to buy tb.B estates in the Wai kato and elsewhere which nobsdy else would bay. Shareholders need have no fear in regard to the realisation of the eotatee.

Mr I. G. M'Cirthy, one of the directors of the bank, said the parliamentary inquiry had shown that the present directors had well represented the interests of shareholders. The director:! could not disclose what thsy would !do in the future. The directors should bs j allowed to conduct the bank's business, and ! shareholders could then cay whether they were ! worthy of their confidence. ' Hr William Booth, one of tha directors of the bank, said the directors had not been indifferent to tbffi interest* of shareholders. Fcois tha time the present directors first took office they had spared no piaia to find out the trua position of the bank and to protect tbe assets remaining to shareholders, sad to take erery meaiw to reinstate tha bank into a position of strength and stability. AU the directors had regarded wilh feelings of profound sorrow tha position to which the bank had been bruught, and the position to which shsreboidiirs had a!sr. Men brought, by its leases, but this state of affairs was brought about before the present directors took charge. Sines the presetit directors lud been in office they had ms.de practically no losses for two years, aud the decision of the Appeal Court that day iv regard to the interest on Colonial Bank accounts would probibly secure' Jo the Bank of New Zealand a further reserve to strengthen it-a position in regards to thefe accounts amounting to between £30,000 and £40,000. The banking inquiries of the lust two jears ij£.d shown the details 01 enormous Josses which bad arisen to the bimk duriag the last 10 or- 15 y«ars. The present directors had not measured out the blame, attributable to the directors or officers in the past. It was not their province to go into this. They had found their hands quite full in the face of the immense losses that had occurred in restoring the strength aad stability of the bank, Thu losses had been largely flue to depreciation in the value of property, but they were also due to injudicious investments, and tha conditions of things had bean simply appalling, and corspariugv tha present state of affairs with the position existing in the pacb he thought shareholders on reflection would s»y that the present directors had done a gre.-st deal for them. They had don 9 moro than be thought at one time would be possible to do. Shareholders might now look upon the position of the bunk »« a. safe one and view the future o? the bank, given prudent management, with hope and confidence. There wss no doubt tome sorenesa at the fact that the directors cud not from the first taken the shareholders into tbeir confidence, but on the whole it mast be admitted tbat a wise arrangement had been mads, aud one that must be tv the ultimate advantage of the bank and the shareholders. He thought the time wsb not far distant when shareholders would receive 5 psr cent, interest on the call now made, and that the remaining call wonld rest iv security in the BhareholdDra' pockets. Mf'T. AY. M'Kaiiaie said it was very cheering to hear such pleasing news from the directors. He did no* wish to injure tlse interests of the bank, it must now bo regarded ss purely a colonial iaafcioutiou, aud he hoped it would bo the means of doing good to many people. He trusted that the directors' anticipations and cheerful words would do good and set all .shareholders in good spirits, and that tbe bank would flourish ».ud reslis.3 all that waa expected of it. •

Toe motion for the adoption of the report and balance sheot was then pat, and carried unanimously.

Mr 'George Allen eulogised the n«e, attention, aad ssaal displayed "by *h» officers and directors cf the ba>.;k, and caid it.would ba ungrateful if shareholders did not tender them their grateful thanks. He, therefore, proposed a vote of thanks to the management and directors of the baak.

This was seconded by Mr Kebbel and carried, / Mr M'Ciuthy acknowledged the eomplimeat and the meeting closed, having lasted half an hour.

At the conclusion of the Bank of New Zealand meeting this afternooG Sir Watson informed the press representatives that the gentleman who . had give n notice of motion adversely c-UieWng the president and general manager of the bank hid withdrawn the same, as he wts quits satisfied with the result of the parliamentary inquiry.