Business and Beneficence

Sun (Auckland), Volume 1, Issue 92, 9 July 1927, Page 8

Business and Beneficence

Auckland’s Private Savings Bank

PARTLY reflecting current financial conditions and partly the desire of the trustees to give the bank's clients still better service, the Auckland Savings Bank s interest rate on deposits has been raised to per cent. In endeavouring to attract more deposits, the institution is following the lead of other private banking companies. Like its competitor, the Post Office Savings Bank, it is a business institution.

r pHE Auckland Savings Bank now pays 3 per cent, more in interest than the Post Office Savings Bank, but the amount up to which it can pay interest is limited, by legislation, to £2OO for each deposit. Formerly the maximum on which private savings banks could pay interest was limited to £IOO, but a considerate Minister of Finance eased the restriction. Recently an effort was made to have the amount further extended, but the Minister of the day would have none of the proposal. MONEY TO EARN By comparison the Post Office Savings Bank has liberal powers. It can pay interest at 4 per cent, up to £SOO. and at 3£ per cent, from there up to £5,000. For the small depositor the difference between per cent, and 4 per cent, weighs according to the viewpoint of the individual, but the man who can put out £2OO or more, to do nothing but earn interest, always looks to see where his cash will earn most, and the result was an inevitable falling-off of savings bank deposits when the private companies, such as the Bank of New Zealand, increased the amount paid on fixed deposits. Economic conditions overseas have affected deposits at all New Zealand banks, and the reduced returns for New Zealand produce have had a corollary in a certain “tightness” of money throughout the Dominion. Bankers regard the stringency as only a passing phase, and believe that Its ultimate effects, promoting greater thrift, will be beneficial. SERVICE TO CLIENTS By raising the interest rate the Auckland Savings Bank expects to counteract competitive influences, and to attract more deposits, in sipte of the financial situation. Other factors than those, however, have been concerned in its decision to faise the interest rate to a level

r not reached in thirty years. For one thing, the bank has been earning good profits —its generous disbursements in the cause of charity and civic advancement are noteworthy proof. It is almost carrying the Memorial Museum on its shoulders, and altogether has distributed £115,000 to various deserving institutions in Auckland. While such generosity is altogether commendable, it has been realised that it can now be well mingled with a measure of greater concessions to the bank’s clients, and the raised interest rate is partly the result. The difference of one-quarter per cent., distributed over all the deposits, will mean something like £15,000 in additional interest. Last year’s profits were about £70,000, so there is still a fair margin of safety. NO ANAEMIC COMPETITION Earning such sums, the Auckland Savings Bank is no anaemic competitor of the State Savings Bank. There are five private savings banks in New Zealand, established at Auckland, Dunedin, Invercargill, New Plymouth and Hokitika, and they are governed by a Private Savings Bank Act, which sets the amount on which they are allowed to pay interest. Since 1921 the number of depositors in the five has risen from 100,342 to 135,074, while deposits soared from £3,555,871 to £5,503,321. The State Savings Bank’s depositors have risen, since 1921, from 678,930 to 755,155 — nearly 80,000; but in the amount deposited, in the period considered, there has been little fluctuation. On the other hand there is evident among clients of private savings banks a greater thrift than statistics of the Post Office Bank reveal. From 1921 to 1926 there was only one year in which the latter showed an excess of deposits over withdrawals. In the same period, deposits in the private savings banks were more than the withdrawals in every year except one. ♦