BANK OF NEW ZEALAND,

Otago Witness, Issue 2168, 12 September 1895, Page 22

BANK OF NEW ZEALAND,

THE HALF-YEUtLY MEETING. . Wku.ington, September 6. The adjourned half-yearly mcc ing of frharcholdera of the BaDk of New Zealaud was held this a'ternoou. Mr Watson, president of tlia bank, was in the chair, and about 30 shareholders were present. The President, in moving the adoption of the iv port-, e»id : You have had tbe ba'ance ehtefc of the bank in your hat.ds for the ya-fc week, and are doubtless aware of the full text cf the " Bank of New Zealand aud Banking let 1895," which has just become law. luto the figures of the balance sheet I need hardly enter beyond saying that it is proposed now, in addition to the ontrios required bj the act, to write off (he reserve fund of £45,000 and the balance oF tr-e profit and loss account of £383, so as to reduce the item " bad and doubtful dtbts " to £376,900, the amount to be written off as provided by the act. As mat>y of the shareholders may not tee the act iUelf, or although siting it may not be able to apply it* provisions to the circumstances of the bauk so as to form a correct conclusion, 1 take Mrs opportunity of placiug on record the provisions of the act, and THE EXACT POSITION in which it vriil leave the bnuk. Iv the first place, the paid-up capital of £900,000, and the proceeds of the call of £3 6s 8d per share, payable this year, are written tff. To replace tlu-se by way of c*pital the Government aro to subscribe £500,000 preferential share*, bearing iutsrcftt at the low rate of 3£ per cent. Tt-eje shares may be repurchased b/ the shareholders ab par witbin tbe ntxfc six years, Sbarrholdeis are called upon to pay another. £3 6j 8d per share in four half-yearly in^ttimeuts, beginning on 30th June next year aud ending 31»t December 1897. This will be (he share capital, aud it is stipulated thtvfc out of tho net annuil profits of the bank, after the piym-nt of £50,000 to the Assets Realisation Board, 5 per cent interest on th-ise sharei will g> (o the shareholders for the present, and in the event of no deflciuicy remaining on account of the properties ienaoved from the baDk'a conti\l the whole profits of the ins'.ittition will be payable to tho sbareholiJera. Iv any ex ent uo further call can be mtuie until after 31»t December IC9B The £1,000,000 invested t.ccording to the B ink of No* Zealand Share Guarantee Aci of 1891- is freed for use iv the bank's ordinary business. Tb?. Government appoint one director of tho bank while the 1-abilty on the part of the colony, exists. TLe whole of the stations, skc'i, and implementw, and other Uudt d properties in Now Zealand, including the Aucklaud Agricul ural Company and theEitates Ctinpany'a share-a in tbe Thames Valley Land Company, are to be sold to a corporate body termed the " As=eti HoAlisatiou Board" for the price of £2,731,806, and suih additional sum as may ba found necessary in order to adjust the accouuts after 31st March. Thi* sum reprcenti the book values of tbesa properties, and this incubus on the aesets of the b*nk and tha Estates Company will now be replactd by debentures of tte Asidfcs B^rd, bearing 3£ per cent, iuterest, and having any deQ'ieucy upon them guaranteed by the colony. By this fcrsusac 1 ion the balance sheet of the Bank of New Zealand Estates Company will be reduced to smill figures, and the position of tbe company will be rendered thoroughly sound, while its liquidation and (ofcal extinction in a very short time will be feasible. The amount to be written off as bad in tbe books of the Estates, Company will hi £167,100, against which no assets exist, aud £290,500 to bring down the remaining assets to th-s'i 1 proper realisable values. The present clilk-iency in the asstts to hi taken over by the Aaf et> Bjard is cjinnut-ed at £350,000. With Uovernmmt and tc jnomical managf-ment on the part of the Assets RealibiUo:i Bo*rd, and an increase in the values of wcol and otlvr product-., of which there id every Jikciiiojd, lli:s d-fieieucy uii^ht be ruade to dis.H-i.ea-, and fch<-. capiLal and goodwill of the bank, which will now be very va'uable, would be then tha free property of shareholder?. In order to seture tbe abjve de'iciency the olony is to ha\e a lieu upou the shareholders' capital aud the uncalled reserve liability. The Absets Board willcmsist of three persons, two to be appointed by the Governmrut and one by the diivctors of the bank. Power is given to the bank to purcha-e tho business ot any other Lank doing business viihiu the colony, but fo that ouly the souad business ol suuh bank

shall be taken over, and thnfc the soiling bank will have to liquidate its own bad and doubtful debts. It is estimated that by such parohaao tho Bank of New Zealand will bo enabled to PAY THE SITAJIKHOLDEHS BEOULAR DIVIDXKD3 of 5 per cent, per annum, and contribute nnterinlly to fcho reduction of tho deficiency of the a»;ots cf the Realisation Board. The acb further provides that whilst the liability of tha colony exists the shareholders are not to wind up or dissolve the bank so as to cause a loss to the colony ; and tho Government, through the president, have the power of vetoing such proceedings as might be considered detrimental to the interests of the colony. These *ra tha principal chauges brought about by the act. Their tfftct; will be to separate entirely from tho bank and to free tho creditors of the bank from any risk attending (he largo maci of properties standing in the books at £3,000,000 of money, which have bo weighed down the bai k during the past 10 years. Had tho d-rectors of th« bvnb kuown when tha Bank of New Zealaud E.titea Company (Limited) wai incoiporated tlut (he prices of wool and other products would fall so low as they have done they Wculd probably never have incorporated the company at aU, but would have taken other measures at that time. Had prices not fallen it is probable fchht the deficiency with which wo are cow dealing would not have been bo serious as to w«rrant the present measures. I would ask those whese first impulse wculd be to impute bl*me to consider what tho valnas of the properties were 10 years ago aud what they are now, and to remember that tbe shareholders of! nearly every important lluanoial institution doing bui-itus* piincipally in tte colony have suffered severely, aud iv many instances have not only had to pay calls but have completely lest their properties. On Ft b vary 7 last, in this place, I stated tj you that it was not contemplated tbat auy further amount of reserve liability should be, called up. At tbat time we hid probed into tho affairs of the bank, but were unable to ascertain the position of the Et-vtas Company until (he accounts of ihe he»d office were removed from London to the colony and until we could strike a balance eheot for the year ended 31st March last. By "The Share Guarantee Act 1894 " the dhecio's aud auditors of th« batik were enjoined to treat tli« item tif £1,850,000 shares in the EsUtrs Company at par value. On ascettaiuing the reeulfi of THE WORKING OF THE ESTATES COMPANY for the year enc'e.l 31st; March Usb, and on becoming aware of the whole ac'ual position of the Bttates Company and the Auckland Agricultural Company, it was appar*ut t'-iat under the system then existing the Estates Company w»h un*ble to pay interest on its indebtedness to the b\uk, and if tbe prices of produce did not rise very considerably yearly deficiencies would accrue, which we should not be justified iv concealing from BhanjlWi'erß. Had we merely c ma ta this mcit'ng with tidings of deficits, the fictlit of the tank would be gone, and the bank itnelf would f o>n follow it. We did notcousid<r id to be our duty to throw up our hands in such a way, but we rppreentnd our position to the tho Pa.rlin.ment hfcling already assisted the b<mk by the guarantee ot* £2,000,000, and we asked for reasonable oa-ist-ance in the iutereti boih of the color. y and of the f-harfho'ders The j.int committee of both Houfleii set up an inquiry iuto the hff.urs of tho bank. This comruitt. c, while being careful not to destroy tho conudouce of tho customors of the baak by probing iuto individual accounts, made a mest careful investigation iuto the geuer-tl business and affairs of the Estates Compiny, aud aaked the dirtctora to put forward their recomm©nd*tii'>nß as to wh*t fhould b8 done to rehabilitate the bank. Thereupon the dirrct-ors recomm( l nd^d a scheme in inott retipect^ similar to that which wes subiaquaatly adopted by tho committee in the.ir reporfr. The mo»t impoitant aUerAtions made by the committee were that, instead of £1,000,000 preferential shares being subscribed for by the Cot* ruiwenh, only £500,000 has bean subscribed, and tbat instead of shareholders haviDg issued to them deferred shares (which they wo'iJdbe able to deal with ia lieu of capital written off) and hypothecating the whole of the £6 13s 4d agairst any deficiency on the e»t^tes, the committee reported that there shou'd be a call of £3 6? 8d par share to be turnod into capital, dividends on which up to £50 000 per annum to the A<sfcts Realisation Board should, if earned, be paid to the shareholders, and that this carpal, together with the remaining £3 6s Bd, shoald be pecured to the colony for any deficiency on tbe -asoets realisvtion. Bub had the directors' recommendation betn carried oat no call might have been necessary. We consider, however, that the SIIABKTIOLDEItS SnOUtT) HE OUATEFUr, for what tbe committee rpffrnmended. and for what Parliarnr-nt has given effect to. Had the bank bren allowed to go into liquidation, the shareholders would undoubtedly hava had promptly to pay the whole reserve liability, or as much of it as they conditionally oould. Now there is only ono halt" of the rrserve liability to pay, and spreading tho payments over two years, commencing nine months henco, will be »gro+able to thokt* who ar<j not in affluent circumstances ; while botht i them and to those who are rich there is the consolation th*fc o» the piym^nts there i« every probiibility of their getting 5 per cent, interest, besides having, under favourable circumst&nres, the goodwill of an enhanced bum'nesa reserved to them by act of the Legislature. The position of the bxnk as regards its creditor* is rendered as secuie and strong as tbat of any institution doing business south of tbe equator, and, the position being now thoroughly ascertained, shareholders may well look forward with confidence and hope. The prospects of the colony, with which the bank ia so much bound up, are brightening — wool and other products are advancing in prico — and when it is taken into account tbat a Id per lb riss in wool alone will mean £12,000 per annum to the Ass Ms Realisation Board it will be seen ho"v important any rise in price must be. The active dt^fclopment of tte miDirg induttry at the Thames and Coromandel districts, and on the West Coast of the South Island, cannot fail to enhance tho profits of the bank. He concluded by moving the adoption of the report and balance sheet. The Hon. W. W. Johnston Beconcl«d the motion. In amwer to Mr B'.ancbard, The Chairman stated that the adoption of the report bound them to writing off the bad debts mentioned in the report. The motion was put and carried without dis* cussion. QUr'STIONS, ETC. Major Messenger a k ked what the goodwill oE the hai.l; memt to .«harehoklerß, as they did no 1 ki>..w what they had to look lorward to? When hi touk shares they were £10 in value, for which lie gave over £20, and understood be had to find £10 and no more. He wanted also to know, aa the bink had been declared in Par> liament to be solvent, how it was necessary to call on tbe reserve liability ? He noticed that the board, in the morning paper, ytated that shar^bo'dtirs would h;.v(- i n visionary mtereft in tho property. It «.) p <in >! i > h'.m taty, as shareholder*, were th«rv v< , »!_> ... a iiiatter o£ form, as Parllamaai uh!j«. And \viu.i£:\ v; thet did.

The President said shareholders had active Bower, as they appointed their directors, but Parliament had the power of veto, which was toly right iv consideration of the guarantee. Mnjor MeaFcnger explained that he was not intßg-znistic, but detired information. Tlie I*resH«-nt explained that tbe goodwill Vras the reversions ry interest in the bank, which Would come buck to shareholders when the whole deficiency en the Assets Company was bleared off ; and, as to the reserve liability, What Major Messenger had said was true before the act of 1694 was passed, but the act of 1895 had a'tered the position. Mr Blanchard, in giving utterance to his Tiews, said that he thought they were those of others present. He had plueetf these views on and in reply to a remark by the president that be wm not tatkicg to the motion, eaid he would finish by moving a resolution, but if BQareholdera did not desire him to do so he wonld sit down. The speaker complained bitt^ly of the action of tbe directors in retiring from the position taken up at the last halfye&dy meft ; ng as to the Assets Company. When in February a number of the shareholders detired an investigation into the Affairs of the Assets Company they were sat on, yet they placed the same information at the disposal of tie parliamentary conitntttee. He acknowledged that slight alterations were nectary ia tbe ticb of 1894, as the second million was so placed as to havo to bo invented at a lobp. They knew £750,000 wor'h of debentures : were cnly redeemed in May, and no one expected that in the l**t balf-year with tbe low • fHriccfi of cur fetiple products tbe bank would . make, a pivfit for the hilf-year ending March 31, y-t they placed effdirs before the Joint Coniinittee of both Houses, not one of whom wa? a.sbarebo!dtr in the B*ck of NVw Zouland, while one was preMdtnt of an opposition bauk and till lately nn c nplojcr of tbo prthidonfc of fche Bsnk of New Z-*land. Yei though ohare-hcld-rs bad asked for an investigation this was refused, end now *v attempt was made to show as darkly as possible the ma.i<tgo>nvcDt of previous directors in order to make their own look bn'gLttr. What w*s the meaning of the sen' live in the p-eydetit's Ja^c year's speech th^fc "wo arc sili^fled that whea this call is paid no furl her call vril ba i.eceesivry " ? TLe I'ieikleut pointed out tint Mi Blauchard h»d omst'ed to read the whoKi stnieace, %vhich said, ''Provided we can work on tLe lines we have l*id oat for ourselves." Mr Blnnchaal did not think it waß uecessary, and said tbe position was that tUey cou'd not trust tilt* presmb directors any more than their predecessors. He complaiued that at a previoua meeting the directors had refused to answer questions or give information, nnd compart d this vcith tbe;r action in granting the information to tbe parliamentary committeo. A short time sgo he bad called st the bank for information as to the land tax payable, and was at krd by tie president what be wanted it for, and waa told then be would toon see legislation 'hit would ease bis mind. He stated thut lh»- lotil cavings of the bank wou'd he £96,000, m rff up mainly as follows :—£15,000: — £15,000 in working (xpen*e-«, £13,000 in salaries and honorarium, £40,000 iv dtb-ntureß paid off iv May, ' £11,000 by replrcing 5| per rent, b/ 4 per cer.t Considonng tbeso Havin^e, tho actic sof the directors could oi ly be described os contrary to the inlere>ls of fhs^oholders. whom they seemed to lcok on as so many wells iuto which they were going to place foree-pnmp«, co tL«t every six months they would get a supply of liquid gold. He c*ll?d on shareholders to defend their rights while ytithey had time, and rot givs proxies thoughtlessly. If -shareholders would send lr'm their proxies be would soe that thoir internets were projected, and he d*red the dircc'.ors to p s^o-je tbo meeting till after the reult of tha Londou nifet ; ng was known. It had been stated by Mie Leg slative Cunuiillor that he knew what Mr W.ud stated in London, but Mr Andrews was thra only mau who kn<-w that a huge a' tar had been s<?t up in rc-g*rd to this ma' ter, and &h&reholders were to styes tve the coloi-y. He aßked why should share h 1 'e.-s do so? II had Ve^n ssid the Govtrutncnt would make a present of the two mi'lions, aud he said let them keep their word. He sUtrd that on the strength of wh*t the president had said many of the chareholdors had pledged their credit, and this call rma*t ruin tothew, and in their name he spoke of this. It had been said that if shareholders did not aecapt this position it would mean liquidation. It meant nothing of the kiad. It was not for him to place an alternative be r ore them, but he believed one result would be tbat this bank would draw down the Government, and it would be a good thing if this body of politic.il experimentalists and plungers were eufc of offiw. He continued by moving — " Tbat this met ting call upon the directors at preo: nfc ia London, Mersrs Gljn, W. T. riolmp^, and another wbose name be bad forgotten, to re«.i£ii thoir position ou tho board of this buik." The President called for a eeonder, bub there being none he declared that the motion lapsed. He explainod thit the directors bad either to. come to the annual meeting when they knew of the deficiency or t»ko to moke the position giod, and this was wh*t they had dona. He bud Eta ted in his speech that in February they had probed iuto the position of tbe Estates Company. If they allowed the bank to liquidate shareholders would hare to pay up their calU at once. Mr B'unchard : We would have the colony's two millions. Tbe President had yfet to Uaro that fch>3 two millions would stand between t>w co'ouy and sharcholJers. It would ba'o been a liability of thftrc-bolderß, and would have had to bo paid for. Mr Blani'liard bad threatened t) thke tho matter to tbe Supreme Court and obtain au injunction to force the bank into liquidation. Mr Blanch&rd retorted tbat this was quite true, and if he bad h*d the money he would have carried it through. THANKS TO PARLIAMENT. Mr Ityley (Duntdiu) said he had listened with pain to the tirade of Mr Bianchard. It wt.B uuwoitby of him. It would not damage the president of the bank. He was pleaded that this motion was not seconded, and also ih»nkful th»t Mr Blanchard'e motion lasS year to Srt up a committee to iuvestigate wan lost, if his speech was anj criterion of what tbe re6ult would h«ve bee^j. He would move — " That this meeting desires to accord a hearty vote of tbauks to Parliament, and especially lo the Governmeut, for the timely assistance rendered to the Bank of- New Zealand and the colony at large at a most critical period in their history .by the Banking Act of this week, and also to express its gratitude for the consideration shown lo the poorer claBS of shareholders in spreading the call over two years ; farther, tbe meeting cordially acki o fledges its diep obligations to the president and directors for the efforts they Aave made to conserve the interests of shareholders and to put the bank on the solid Foundation on which it now rests." He thonght jbhis resolution would commend itself to shareholders. They must not forget that the position was not due to the action of the Government or to the present directors. It was due to those of the past and should Lave been Required into 10 years ago by file Blanchard and others. He wa* not owing the Bank of fcfbw Zealand * penny and could say that the

directors had done everything they conld to conserve tho interests of shareholders, and he believed they could look forward hopefully to the future. If the bank bad been allowed to close its doors, it would have caused widespread rain and dishes* and paralysed industry. The colony had been on ths mouMi of a vjlcano, and had it Hot been for the Government, who had shown great pluck aud consideration, the colony would have been blown to atonn. If a committeo of shareholders had been appointed last year, would the Government have stepped in ? Nob a bit of it; and the result would have bocn simply ruinous. Granted that the call would be hard on some shareholders, but it would form the nucleus of a future capital, and would return 5 per cent;, interest. They had every reason to look hopefully to the future. The facb was that the b»nV had been greatly damaged by some of itJ own shareholders, aud had it not been for some of its patriotic friends its position would have been worse. When people came to him he advised them to have faith ia the old inatitntioa. The bmk bad been greatly ' mismansg-id in the past, but he believed they had now at tho hem those nho would steer the good old ship stfely into port. Four clawes would be benefited by tbe act juet pisied. First, struggling stt'le^B, who.if the b*nk clostd, would be bound to be crushed, as other binks wonld not take their account*. Second, working men, who, he hoped, would realise that if the bank had ol^s^d, tbe whola coummn'ty would have b:en in a state of panic, and labour cud not have been emplojed. Tbe Government had ehown intelligence and backbone, and he for one felt deeply grateful to them. Another cl«si that would benefit would be the shareholders th<m*otveß. H^ believed it would be tbe f alvafcim of many of them, as supposing the ta''k had gooe into liquidation all the capital w-n!d have bten c*Ut;d up at once. A (Shareholder : There were atse's as a first call. Mr Rjloy : Assets on a forced sale would iiofc realine much. In answer to Mr BUiich&id he a«ked how could fche directors hive given the information tu«y had now at the lasb ratebiug. He was thankful the directors had sufficient lionebt/ to show the real position, and he h <pf,d they would go on ns the bank dow had a good future, especially if they secured the bisiuess of tho Colonial Bank. Ii was monstrous to e»y that tho C lonifcl Bank wa* in the same position as tha Bank of New Zealand. H-j knew that it was doing a good business. Mr Tunntr, solicitor, Wellington, seconded the resolution. On being put to the meeting the mot'ou was declared carried unanimously. Mr Allen moved a vote of thanki to the officers of the bank for their services during the past year. tfkcoLdid by Mr Barry and carried, Mr Andrews (auditor) reepoudiug for the officers. Iv reply to Mr Blanchard, the President stated that the n<-xt balf-ye\rly meeting would bo held in February as wovided by the act. The meeting thea terminated.