NATIONAL BANK OF NEW ZEALAND.

Taranaki Herald, Volume XL, Issue 9189, 17 September 1891, Page 3

NATIONAL BANK OF NEW ZEALAND.

« REPORT OF INFORMAL COMMITTEE. We are indebted to Mr Clark, manager of the New Plymouth branch of the National Bank, for the following report of the Informal Committee, appointed 29th of June, to consider the present position and business of the Bank, and the constitution of the Board of Directors. The report says :—: — The Committee have had placed before them the whole of the books and papers they required, and have had several interviews with the secretary and auditor, who have afforded all the information in their power. The result of this investigation shows that most of the losses had occurred prior to 1886 — the estimate of probable loss made at that time having been largely exceeded, many firms to -whom advances had been made, and who were regarded at that time as sound, being unable to meet their engagements on account of the con* tinned commercial depression in New Zealand. The Committee find that mistakes have been made, both in London and the colony, in continuing accounts where increased loss appeared probable, and there is no doubt too sanguine a view has been taken when prosperity appeared to be reviving in the colony, and the fact was not sufficiently recognised that prosperity although advancing was gradual and very slow. The amount proposed to be written off the capital appears — judging from the books, papers, reports from the colony, and information placed before the Committee by the Chairman, Auditor and officials — to be sufficient to cover the losses incurred to the present time, and they have no hesitation in recommending that the resolution passed at the recent meeting be confirmed, as being the only one calculated to place the Bank on a solid foundation. It is satisfactory to find the Bank is doing a large and profitable business, and there is every ground for hope that tho Bank will share in the gradually increasing prosperity of the colony, especially if more cautious policy is pursued in future by both managers and Directors. * With reference to the amount of land held by the Bank as collateral security for advance in New Zealand, the Committee deemed it advisable to have the fullest details placed before them, and they find the Bank holds, as collateral security for debts regarded as doubtful, land of the value of £24,028, and as collaterial security for accounts considered good, land of the value of £279,179. These amounts are very far below what were generally believed, and Bhould be most reassuring to shareholders and all persons interested. With regard to the constitution of the Board : — The Chairman having stated at tho recent meeting of the shareholders that tho Directors had authorised him to say that if the resolution was passed they would place their seats in the hands of the Committee, and we«e perfectly ready to abide by their decision, the Committee carefully considered to what extent it may bo expedient to accept this offer. They have come to tho conclusion that, in the interest of the Bank and for the satisfaction of tho shareholders it is requisite that a considerable change should be made in the composition of the existing Board. They recommend that the number of London Diroctors should be reduced to six, and that no fresh appointment of a Colonial Director should be made. They understand that the following gentlemen are prepared to Horvo on the Board if it should please the uhareholderß to appoint them : — Mr E. Brodie Hoare, Mr James Maeandrew, Mr J. M. btobart, Mr Steele, Mr Thomas Seaber and Mr Philip Vunderbyl, and they recommend that these gentle men be appointed accordingly. They likewise think that in the present condition of the Bank the remuneration of tho London Board should bo limited to £2000 annuully. The question of the general reduction of expenditure has occupied tho attention of the Committee, and, with this object, they bavo examined tho books. They find the salaries generally on a very moderate losle, iootbey are not prepared to rcccm*

mend any reductions in salaries. An illpaid servant novor conduces to good management ; but they would venture to suggest to the now Board the necessity of > a thorough investigation into the nature and amount of business done at each of the Branch Banks, with the view of considering as to how far it will bo adviaablo to continue, with due regard to the interest of tho Bank, any branch which during tho last six years has failed to show any satisfactory profit. With regard to the call of thirty shillings per share sanctioned et tlie last meeting, the Committee desire to say that in their judgment such call is necessary for tho well-being of the Bank and to afford confidence to depositors ; and tho paid-up capital will certainly not be more than is sufficient, after the call has been paid, for the efficient working of the Bank. The following facts should be generally known : — 1 The Bank is not in immediate want of money, the cash in hand being larger than for many years past. 2 The resources available are quite sufficient to meet every demand and the depositors are amply Becured by the uncalled capitil; the shares being generally held by responsible persons. The Committee cannot conclude this report without expressing their conviction that the first duty of the new Board of Directors will be to satisfy themselves that they possess in the managers of the several branches, men upon whose judgment, discretion and firmness they can place_ full reliance, for these qualities are essential to the successful working of any Bank. . The Committee have no desire to dictate to the Board the policy they should pursue, or to define the nature of their investigation of the repeated • mistakes which have led to the present position of the Bank, and the loss of so large a proportion of the capital; but they feel strongly that upon the thoroughness of tho investigation made by the now Board will materially depend the future prosperity and sound position j of The National Bank of New Zealaud.