BANK OF NEW ZEALAND

Otago Daily Times, Issue 15859, 3 September 1913, Page 6

BANK OF NEW ZEALAND

PROPOSALS. GUARANTEE CONTINUED. PROVISIONS FOR NEW CAPITAL. 'POWERS DEFINED. . (Fbov Oob Own Cobbebposdent.) " WELLINGTON, September 2. The Bank of New Zealand Bill was introduced in the House of Representatives" this evening by Governor's Message. Ihe Minister ol Finance (the Hon. Jas. Allen) is in charge of the measure, which precipitated an immediate discussion on its bein>' ■introduced. The Bill will -be read a second time, pro forma, and referred to the Publice Accounts Committee for consideration. After citing in the preamble tho existing circumstances of the bank and the constitution of its capital, and; specially mentiomnig that the £1,000,000 of guaranteed stock created by the Act of IM)3 will mature on July 19, 1914, the measure, m clause 3, provides that "The Bank shall redeem the guaranteed stock at maturity thereof, and m order to enable such stock to be redeemed the bank is hereby empowered to create and issue further capital stock to the extent of £1,000,01)0, having a currency not exceeding 20 years, and carrying a dividend at a rate not exceeding 4 per cent per annum, payable half-yearly." The machinery sections of the 1903 and 1904 Acta are retained to provide mainly that this stock shall have priority aver existing shares of the bank, whether preference or ordinary shares. All stock redeemed under this Bill shall be delivered by the bank to the High Commissioner of New Zealand for cancellation.

SINKING FUND PROVIDED. As security for the'redemption of the stock authorised to be issued under sec iton 3 hereof, the bank shall, in the month of March in each year, during the currency of the said stock, set aside the sum of'i!50,000, and shall invest the same in debentures or other securities of the Go ; vernment'of New Zealand, payable both as to principal and interest in London, bearing interest at the rate of 4 per cent per annum, payable half-yearly, and maturing on the due date of the said stock; and the Minister of Finance is empowered to create and issue' such securities ac-. cordingly. All securities issued to the bank under this section shall be held by the High Commissioner of New Zealand in trust to secure the redemption of the said stock, provided that all interest thereon shall be payable to the bank. NEW CAPITAL. The directors are empowered to raise new capital for the bank to an amount not exceeding £3,000,000, by the creation and issue of 150.000 shares, to be called "B preference shares," of £6 13s 4d each, and 300,000 new ordinary shares of £6 13s 4d each, upori all of which shares there shall be'no further liability in any event whatever.

The "B" shares are to rank next to th.i prefertnce shares and have priority jf all other shares. New ordihary shares rank equal to the existing ordinary shares. The issue of the new shares is' to be made subject to the approval of the Minister ol Finance, and is to be in the' proportion of one "B" preference share to two new ordinary shares, to be offered simultaneously for subscription. The whole of the'capital is to be called up forthwith when the. issue is made, provided that payment may be made by instalments on any such issue. His Majesty shall have the first option of purchasing the whole of the "B" preference shares comprised in such issue. In accordance with this option the Minister of Finance is empowered to purchase such shares at a price n|st greater than 100 per cent, of their nominal value, and is empowered to pay for them by debentures at 4 per cent, per annum, which he may issue. These shares confer no right to convene, vote at, ot otherwise take part in any meeting ol the proprietors of the. bank! The preference shares shall hereafter be called "A preference shares." The "B" preference shares treated by this Bill shall be called "B preference shares."

DISPOSITION OF ASSETS. In the event of the winding up.or the dissolution of the bank the assets thereof shall, after payment of all the liabilities of the bank, including its capital stock, be applied first in repaying the capital paid up on the "A" preference shares, next in repaying the price paid for the "B" preference shares (including any premium paid to the bank before issue thereof), and the balance shall belong to the holders of the ordinary shares in proportion to the capital paid up thereon,

OTHER POINTS. It is provided that each of the directors shall be entitled to attend meetings of proprietors, but may not vote unless he is a proprietor. The chief auditor and the assistant auditor may attend, but may not take r>airt in the deliberations. The chief auditor may by memorandum in the minute book suspend the operations of any act or proceeding of such meeting for 28 days from the date of the meeting, and may by a like memo, remove such suspension.

The number of shares in the capital of the bank that may be held by one proprietor is increased from 300& to 6000. It is further nrovided that the sum of £4000 (per year) instead of £2000 may be divided between the directors, and 'also that shareholders may exercise, 2000 votes by proxies instead of, as formerly, only 250.

DISCUSSION IN PARLIAMENT. (Pee United Press Association.) WELLINGTON, September 2. When the Bill was introduced Sir J. G. Ward said that, in view of the fact that there had been diversity of opinion between the shareholders, and the Government representatives he would like . to know whether they had agreed to differ and were unanimous on the provisions of tho Bill. He hoped, in connection with this great institution, that the House would keep an open mind and that the Bill would go before a committee.

The Hon. Jlr Allen said it would go before the Public Accounts Committee.

Sir J. G. Ward said it was a moot point whether, under all the. circumstances attaching lo the bank's reserve by the State, the country should pay a premium of 50 per cent, on the shares to be allotted to it. On the question of increasing the capital by three millions, he said it would be better not '■ to have a much larger capital named in the' Bill than the bank could immediately require. It would be better that the bank should come back to Parliament and ask for.more power if it should require to raise further capital to meet the demands o[ its expanding business. ( It was, in his opinion, a magnificent tribute to the soundness of tho banking institution of the dominion that the State's connection with this branch had not resulted in the loss of a single penny to the country. He was not prepared to enter into a close analysis of the Bill until if had been before the committee.

Mr Wilfovd said that a share of State control in the management of the bank would have a steadying influence in the conduct of "its business. Evidently the profits of the bank had been enormous, and unleas the State kept a strict eye upon it it would be found that either its shares 1 or its dividends would go up considerably. It should be the duty of the State representatives on the directorate to see that there was no relation between the rates charged on overdrafts and on deposits, The position of the bank was entirely due to the courageous action of the State in coming to its rescue, and nothing should be done to sever the partnership which now existed between the bank and the State, Mr Payne condemned the Bill in toto. Mr Myers said it was a matter for congratulation, that the assistance given by the State to the bank in its dark days had now resulted in the splendid position in which it found itself to-day. Considering this assistance. he agreed with Sir J. G. Ward that it was unfair to suggest that the country should pay a premium of 50 s per cent, on the shares which it acquired. The Hon. Mr Millar maintained that it was the country's capital that had made the bank, and it was the first case he had

over heard 'of where a half puriher couldsay to the other ''you are going out." If three million of extra capital was to be raised the State should have half ol that capital, it was a shareholders' Bill pure and simple, and 4ie would oppose it troni the first clause to the last ii an attempt was made to put it through in its present form.

Mr Veitch said there was a banking ring in New Zealand, and the only way in which they could control that ring was through the State power over the Bank of, New Zealand. Evidently the profits of the banks were great, 'i'nese profits were being taken out of the pockets of the people, and what he wanted to see was a limit of profit placed on the shares of all banks. He hoped the House in discussing the measure would- strike the high note of a national conference upon a question that was far too serious to be regarded as a party question. The Hon. Mr Allen, in Teply, said it was intended to refer the Bill to the Public Accounte Committee, and also to treat the Bill as a non-party measure. He did not think it wise, as Sir J. G; Ward suggested, that the bank should come to the House : every time it wanted fresh capital, and so a wide margin had been fixed which could only be operated on with- the consent of the Minister. He did not agree with Mr Millar that the State was a half partner in the bank. The proportion was as one to two, and not as one to one, and that proportion would be maintained. He warned members against raising the cry of a State bank at this juncture. The time might come when they could start a bank on a State basis, but that time wa6 not now. He would be glad to help the old shareholders if it were possible to do so,, but it was. not possible to do so now. Most of them had sold out, and could not be assisted. The Bill was read a first time.