Banking Enquiry.

Opunake Times, Volume V, Issue 199, 31 July 1896, Page 3

Banking Enquiry.

Wellington, July 28.

Tl»e Chairman said he had decided to fall back on the Standing Orders of the House in order to curtail spe chea in this committee, and he would therefore apply the Standing Order No 108, which limited the speeches in the committee to ten minutes duration. Mr Seddon desired to speak on this proposal, but the Chairman said he would not allow any discussion to take place. He took the whole responsibility of applying the Standing Orders as he considered this step was necessary in order to faciliate the business of the committee.

Mr Montgomery desired to make a jersonal explanation with regard to an incident which happened between himself and the Premier at Friday's sitting, and asked that the Premier should withdraw certain words which he had used towards him (Montgomery) on that occasion. The Chairman held that Mr Montgomery had lost his opportunity, and he could not therefore allow any ex-

planation now. After further remarks by Mr Montgomery and the Chairman, Mr Montgomery said under the circumstances he felt it his duty 'to retire from the committee, and accordingly rose and left the room. The examination of Mr Booth was resumed by Mr Seddon. Witness said he was not prepared to say at the present how the amount written off in 1895 was distributed over the various colonies. Information was being prepared. He could not state what was the highest sum writtten off for any person or company. To a large extent persons or companies who had writiDgs-off were entirely released from liability, but a considerable sum not less that £200,000, was held in suspense. Witness stated that it was on account of these writings-off that the bank approached the Government in 1895. As a rule people themselves do not know of the writings-off, but

for the most part amouuts are held in reserve until tbe accounts are hopeless. Knowledge of the Bank's attitude often precipitate bankruptcy, whereas by silence bankruptcy might now and again be avoided. Banks were sometimes obliged to carry on insolvent concerns. If adequate provision is made for dangerous accounts, the balance sheet, in spite of this policy, may show the true state of affairs of the Bank. His experience showed him that larger provision

ought to be made by colonial banks than had been done hitherto for bad arid doubtful debts. Directors as a

rule dealt only with accumulated writings-off at the end of tbe year. The last of tbe writings-off could be produced, but he did not promise to produce it. In 1895 the Bank found it absolutely necessary to approach the Government. The Government did not appro .ch the Bank. Mr Seddon asked where the proposal for the purchase of the Colonial Bank came from ? Mr Booth said he believed it would be nearest the truth to say that it was

the wish of the Bank of New Zealand

that, if possible, arrangements should be made by which ttie Colonial Bank could be purchased. The President of the Bank was Very anxious it should be done, and the directors recognised that the proposed purchase was to a large extent advisable. It was necessary that the competition of the Colonial Bank, which was sometimes difficult to deal with, should be removed, but the Directors of the Bank of New Zealand, declined from the beginning to make complete purchase of the Colonial Bank. They determined to buy only the good business. They instructed their ablest officers to take the books of the Colonial bank and go through every account, and value it and report. That was done, and then the directors carefully checked the report in detail, and their findings were embodied in the report to Parliament' asking for sanction of the purchase. They did not take the balance-sheet of the Colo-

nial Bank as their basis. The direc-

tors now believed the cover provided 9 against loss in the B list was ample, and it might happen that all the cover would not be required. He had no knowledge that the Government, or any member of it, had anything to do with A,B,C and D lists, but he had reason to believe they had not. The total assets of the Colonial Bank taken as good amounted to £2,568,190 ; the assets shown in the Colonial Bank balance-sheet were £8,001,236. The liabilities to public were £2,509,284 ; the liabilities to shareholders were £'491,952. He had no hesitation in saying that the experience of the directors of tbe Bank of New Zealand since making the purchase of the Colonial Bank had justified the arrangements and had assured the directors that they had made a good bargain for the Bank of New. Zealand. The Bank has been able to retain nearly the whole of the business of the Colonial Bank, and the position of the Bank of New Zealand was now one of complete safety, with adequate and prudent management, as compared with the position before legislation of inevitable collapse. He believed they would meet their engagement with the Assets Realisation Board. The directors felt that the Bank should as s< on as possible withdraw from business in the other colonies. Tbe Newcastle branch has been closed, and they hoped soon to close the Adelaide branch. In fact the Bank had been for some time past witdrawing from the advance business in Australia. The Victorian business was a satisfac-

factory one at the present time, but the condition of affairs there indicated the prudence of withdrawing. The Bank had heavy losses in Australia in years past. The Bank's business in New South-,Wales was a fairly profitable one, but it had great load of misfortune to carry on ha shoulders. All

bad and doubtful accounts in Austiaha had been provided for. The Bank was carrying on a fairly large safe and profitable business in Fiji. The directors were realising upon Australian trading concerns in their hands as quickly as possible with results fully up to expectations. The trading concerns carried on by the Bank in New Zealand were doing very well. Indeed, the whole value of shares taken over was only about £BOOO.