OVERDRAFT REDUCTIONS

Otago Witness, Issue 3556, 9 May 1922, Page 53

OVERDRAFT REDUCTIONS

WANGANUI, May 5. A New Zealand firm with a branch in Wanganui had occasion to approach its bankers wilh a view to getting a reduction on overdrafts, but. the bank could hold out no better promise than 7 per cent. The firm negotiated in London, with the result that its requiremonts have been met at 5 per cent. AUCKLAND, May 5. A leading banker, on bqing questioned with reference to the Press Association message from Wanganui (stating that a New Zealand firm had obtained overdraft accommodation in London at 5 per cent.) remarked that he had road it with great satisfaction, and that he hoped that many more business people and others indebted to banks would borrow outside the dominion in order to reduce their overdrafts here. lie added that in increasing the overdraft rate to 7 per cent, the banks had mainly in view the forcing of customers who were in a position to sell assets or to borrow against them to do so. “It now seems,” he states, “ that one customer, at any rate, has done this. It is quite possible, in view of the present abundance of money in London, to borrow at 5 per cent, for short dates against gilt-edged and readily realisable stocks such as Imperial Government securities. It by no means follows. however, that people can borrow in London at anything like such a low rate as 5 per cent, against such securities as banks in New Zealand have been obliged to accept in order to help their customers through the present financial stringency in the dominion. In fact, there customers to whom the banks have rendered assistance who could not borrow money -in London, even at 10 per cent.”