BANK OF NEW ZEALAND.

Taranaki Herald, Volume LXVII, Issue 16461, 13 June 1919, Page 6

BANK OF NEW ZEALAND.

ANNUAL MEETING. The annual meeting of the proprietors of the Bank of New Zealand was h'eld at the head office, Wellington, at noon on Thursday. Mr. H. Beaucliamp presided, and in moving the adoption of the report and balance sheet-.sheet said:— Reserve hand.—The appropriation made last year raised this mud to £2,2UU,UUU ; aigt the lurtner transfer of £iol>,UUU waich we arc proposing to make this year will increase the rund to £2.3uU,UUU. Notes ui| Circulation.—£3,72B,249. Tins item exhioits a further increase of £415,264. rue demands upon ns in connection with payment of returning troops have Ijeen heavy and account lor a large part ol the increase. Deposits.—£3i,VT6.3o3. These show a growth of £1,278,417. The actual increase in deposits, fixed and free, frim the public is nearly £2,220,000. Government deposits have shrunk about £1,000,000, thus making the net increase a little -over a million and a quarter.

Bills Payable gnd other Liabilities.— £2,860,391, an increase of £530,832 — an ordinary movement which requires no explanation. Coin, Bullion, Government Notes and Legal Tender N0te5.—£6,719,765—a decrease of £505,281. There has been a general shrinkage in’notes and bullion, hut an expansion in coin and cash balances, leaving the net decrease as above.

Money at .Short Call and Bills Receivable in 1xmd0n.—£13,818,056, an increase ol £1,3?'5,176. This'increase i.s temporary and was occasioned by the receipt of Imperial Government payments for Colonial comandoered produce. It is therefore, in a sense, the contra to the increase in deposits upon which I have just commented. The funds are temporarily employed in giltedged securities, which are readily realisable when the depositors require to draw theii produce proceeds in the Dominion. All our London investments are written down to a figure -at which they would be easily saleable.

Investments in the Dominion now stand at £3,276,162. The assets included under this and the two previous headings of coin, etc., and money at short call, etc., are equivalent to 62.16 per cent., or roughly 12s 5d in the £. of the hank’s liabilities to the public.

Advances.—Bills discounted £1,475,750, and other advances £17,380,787, show a combined increase of £1,078,783. 1 make Reference to the causes of this movement at a later stage of my remarks. Meantime 1 may say that we have- been informed that there have been complaints that the bank is not affording adequate support to the trade and industry of the country. I can only say that there is' ho- justification at all for such complaints. The hank is turning away no business offered by its customers that can, by any means, be made suitable for a bank’s consideration. You will of course clearly understand that there are limits to advance business beyond which it would be injudicious for a hank to go. A bank’s province is, properly speaking, to finance trade. It should not sink money in land, buildings, machinery, and suoh-like. The money for those should be provided by the customer’s own capital, and the hanker should not he asked to assist until work and trading commences. When that point is reached, the time has arrived when the bank can take a hand. Sometimes, however, we are approached with a request to find all the money needed to start some new industry, whilst the promoters themselves propose to provide nothing, or next to nothing, in the way of capital. Applicants must not he surprised in such oases if their applications are refused, or sanctioned only on condition that a reasonable amount of capital is provided by those primarily interested. 1 notice in reading a report of tho last meeting of shareholders of Barclay’s Bank, Ltd. that the dcpufcy-

chairman, Sir Herbert Hambling, referred to the same question. He said:—

“ . . . . Wc receive many applications from people who hardly understand the difference between banking capital and capital that is necessary to run their business. They do not quite understand that a bank is quit© willing and anxious to finnance trade, and quite willing to give to their customers temporary accomodation to help them jn their trade ; but it is not the province of a bank to employ their money in providing the commercial community with fixed capital. There is a big distinction. A trader writes that he has an opportunity of buying some neigbouring business for so much money, and will we please lend him the money to do so. If he is successful, lie will pay back after a- period of many years, but if he is unsuccessful, you will lose your money. That is not security, and that is not the method in which a- hank should employ its money. In trading, in the export and import of goods, in temporary accommodation to their customers, you will find that the big banks which are in existence at the prseent time will give ©very case the most sympathetic consideration, and I think they will give them help, hut not supply them—nor should they expect it—with fixed capital for their business. . . . .” t >

In these words, Sir Herbert has set out his bank’;? position and ours, and the position of every other bank doing a legitimate hanking business. . I echo his views, and would add that any bank departing to any considerable extent from this rule indicated would ha running undue risks and courting disaster.

Landed Property, Premises, etc.— £399,867. This exhibits a decrease of £25,956 after writing off, from the year’s profits, £50,000 for depreciation. There has been no large expenditure on any one particular building, but the aggregate outlay on tho various properties has been considerable and has absorbed nearly half of the amount of our appropriation. Profit- and Loss.—After paving interest on the guaranteed stock, providing for the annual giant to the Provident Fund and for a special grant to the fund, paying bonuses to tho staff, writing off £50,000 < from premises and furniture accounts, and making all the necessary provision for had and doubtful debts, and for depreciation in tho value of other assets, the net profits for the year amounted to £388,022 os compared with £336,607 as at March 31, 1913. The amount brought forward from last year was £145,702, which gives ns a total of £428,724 to deal with, after deducting the £105,000 paid away in the 6 per cent, dividend of December last. We now propose to pay a further dividend of 6 per cent, and a bonus of 3 per cent, on the Ordinary and “B” Preference -Shares (making with the dividend paid in December, 15 per cent, for the year), and a further 4 per cent, on the 11 A” Preference Shares (making 10 per cent, for the year). This will make the total of dividend and bonus for the year £237,500—the same as last year. Of the amount remaining—viz., £296,224—we propose to place £150,000 to credit of the reserve fund and to carry forward the balance of £146,224 to next account.

Tho sums paid by way of rates taxes, and note duty, this year have absorbed £386,272 of our earnings, as compared with £846,384 in the previous year. Before closing my review of the balance sheet, I would like to draw your attention to the continued growth in our aggregates. Onr assets in this bidance sheet total £43,213,706. The figure for the previous year was £40,838,682. The increase since March 31, 1914—i.e., in five years, is £lB,813.456, or upwards of £3,750,000 per annum. BANK’S UNCALLED CAPITAL. i £3 6s 8d per share on 150,000 ordinary shares. The seven years within which the board agreed that, subject to the approval of the Minister of Finance, this capital should he called up, expire at the end of 1920; and shareholders are beginning to inquire when the call is likely to bo made and as to tho terms of payment so that they may arrange their finances in anticipation. More than a year ago, tho hoard

came to the conclusion that the time was in eight when this capital could he advantageously employed, and the Minister of Finance was accordingly approached in April. 1918, to approve a proposal to call it up and make it payable in four equal instalments spread over the period from April 1, 1919, to October 1, 1920. The Minister replied that the matter had received the consideration of the Government, and that the question should be brought up again in course of a few months.

Accordingly, in November last, we again approached the Minister, but wore informed that it was regretted the proposal could not be agreed until all war loans had been raised.

A few months later, after the public announcement of the raising of further capital by the National Bank of New Zealand and the Union Bank of Australia, we again addressed the Minister, pointing out that the restrictions imposed on this bank placed it in a disadvantageous position as' compared with the institutions mentioned, and again requesting that the consent of the Government bo given to the calling up of the capital. We Avore, however, advised in reply that the matter must stand over until the return to New Zealand of the Premier and the Minister of Finance. It will be remembered that when the arrangement was made for the calling up of the capital within seven years, it received the approval of the Minister of Finance, who, however, pointed out that he was not in a position to bind his successor. Nevertheless, 1 feel sure that it was considered quite improbable that consent would he withheld by the present Government. The position bqing as stated, we are unable in the meantime to move in the matter of making the call. We are quite ready to make it at once, but in the absence of the Minister’s approval are precluding from doing so. We can only await developments. BOARD OF DIRECTORS. Mr. J. H. Upton and myself were the Government nominees on the hoard to retire by rotation at March 31 last. The Government has been pleased to reappoint us for a, further term of two years as from that date. In April last, my colleagues again honoured me by re-electing me chairman of the board for the current year. LONDON BOARD. There is no change to report in the constitution of the London board during the year. The members of that board continue to control the important business transacted by the London branch, with much care and sound jwkjment; and in times like the present, when the financial outlook is no uncertain, and sometimes disturbing, it is a- great relief to us to feel that tho bank’s large London interests are in such trustworthy, conscientious and capable hands. STAFF. The termination of the war and the gradual return of the troops is already relieving the strain upon the personnel of our male staff. We have had the pleasure of welcoming and reinstating in the service many returned officers, and there are still many more to come. We are now tin a position to begin giving much-needed holiday leave to hard-worked officers, who have been bearing the burden of the business dining the years of war in inadequatelystaffed offices. Of the total number of officers who joined the coloursj namely 560, we had at 31st ult. 219 still on leave with the military forces; 203 had returned to the Dominion and resumed duty; 70 have been killed. A total of 136 have been wounded. It is proposed to provide a permanent memorial to those who have lost their lives in the service of their country, by erecting in a suitable position in the banking chamber a tablet on which tflo names of those officers will be inscribed. W omen clerks continue to take a'substantial part in the practical work of the bank. At 31st ult., the number on the roll was 396, a reduction compared with the total of a year ago. Several ladies have retired voluntarily, now that the need for their services is no longer pressing. We have not, so far, found it necessary to dispense with the services of any desiring to remain with us, and are hopeful that adjustment in tlie numbers will bo effected automatically. A proportion of women clerks will, in any case, be permanently retained on tho bank’s staff, iis it has been found that in certain classes of work they are very efficient and highly satisfactory. GENERAL MANAGEMENT. If is with regret that I have to announce the approaching retirement of our general manager, Mr. WJlliam Callender. Mr. Callender completes 50 years’ service as an officer of the bank on January 17 next, having entered tho bank’s service on January 17, 1870. Ho has expressed a desire, now the wav is over—or practically so—to be relieved of his position as general manager early in the new year. As ho is several years over the age at which he is entitled to retire at his option, we cannot do otherwise ttym comply, as we have done with very genuine regret. Mr. Callender has, in the course of his fifty years’ work, occupied many important posts in tho bank, including that of chief auditor, and has rendered to the bank most conscientious and valuable service. Ho took up the position of general manager on April 1, 1907, so that when the time for his retirement arrives, ho will have served nearly thirteen years in that capacity. Intimation of the approaching changes having been made In the press, it was necessary that I should refer to tho master and make these explanations. To succeed Mr. Callender as general manager, the board has selected Mr. Henry Buckleton, the bank’s present manager at Auckland. Mr. Buckleton has had a considerable and varied experience in tho bank’s service, and the board believe him to be well qualified to fill the post.

Mr. Bt. W- Kane, jn seconding the motion for the adoption of tho report and balance-sheet, said:— Referring to the agreement made in September, 1913, with tho Government, regarding the £3 6s 8d per share of tho uncalled capital on ordinary shares, which agreement was confirmed by the board on September 25, 1913, the details of this arrangement were fully set out by the late Mr. Martin Kennedy, one of your representatives on the board, at the half-yearly meeting held on December 18, 1913; and I particularly desire to draw your attention to Clause 2 under the heading that “the Government, on its part, agreed,” which reads as follows:

2. That tho uncalled capital on tho existing shares, namely, £3 6s 8d per share (£500,000 in all), is to be called up on the terras provided for in the Deed of Settlement, within seven years from tho date of tho passage of the Act, or sooner, if in the opinion of the hoard tho position and p r. ruing, f WPr of the bank justify yr-h tailing ujx,

Mr. Kennedy wont on further to say:— Any resolution of tho board calling up the capital would, of course, bo subject to the approval of the Minister of Finance; and 1 may hero mention that, having that in viow, 1 on September 25 last waited upon the Hon. Mr. Allen and obtained his assurance that, if the board saw lit to make the call earlier, rather than later in the period mentioned, he would not offer any objection. This promise on Ills part was followed b\ an undertaking on my part that tin. shareholders would stand to tin agreement entered into on Septombo. 16, notwithstanding that the I’iibli Accounts Committee had ,delete;, from tho Bill as submitted to Parliament, Clause 10, which conferred upon you the whole interest in the reserve fund of the hank in tho event of winding-up.

The then Minister of Finance, it will be observed, approved of tho arrangement ; though in a letter to tho chairmen he qualified his approved by stating “ . . .of course it must bo understood that I cannot in any way him. my successor in office as Minister of Finance.”

In view of what follows, I wish here to emphasise that tho arrangement at tho time was in the nature of an agreement; that it was so regarded by both tho Government of. the day and tfie shareholders; that the shareholders have carried out their part of the agreement, and now naturally look to tho Government to carry out its part. The chairman has informed you as lo what the board has been doing to obtain the Government’s permission to carry out its agreement with tho shareholders and make tho call.

To what lie has told you, however, 1 wisli to add that, after the dispatch of the last letter to tho Government, a deputation from the board, consisting of tho chairman, tho general manager, and Mr. Watson and myself as your representatives, waited upon tho Act-ing-Minister of Finance to personally urge that a favourable reply should he given to the application. In his verbal reply, and subsequently in a letter dated April 10, the .-Minister stated, with reference to the raising of capital by the Union Bank of Australia and the National Bank of New Zealand, that no distinction had been made between those institutions this bank, because they had obtained from the Imperial Treasury authority for raising their capital, ancT that-the New Zealand Government was not in a position to exercise control in their case. He also said there wex - e other points of i.he subject which Cabinet would have to'consider on the return of the Ministers now in London: hut there would be no breach of faith, and he would cable the Minister of Finance and place before him the views of the deputation. On May 16, the Acting-Minister stated that he had received a reply that Sir Joseph Ward was still of the opinion that the matter should be held over pending the return of tho Prime Minister and himself to the Dominion.

I. would now like to draw your attention to this point: That the hoard is not asking for permission to make an issue of fresh capital, but merely to collect an instalment of capital issued over twenty years ago, the calling np oi r.hivh ,;ti •ih-.Tstinn of llip

was clearly Tontemplnted by Clauses 6 and 7 of the Bank of New Zealand Act, 1903, and .which by the agreement of September, - 1913, has to be called up—

“ . . . within seven years from the date of the passage ot the Act, or sooner, if in the opinion of the board the position and earning power of the bank justify sueh calling up. . . As far back as April, 1918, the board considered it in the interests of the bank that the call should bo made, and sought authority to make it accordingly; and the propriety of the decision •:hoy then arrived at has since been -ridenced by the action of many of the ieading banks of the Empire who, in view of anticipated post-war developments and requirements, have increased their capital and strengthened their financial resources. 1 would now like to emphasise that, ' apart from the expediency of calling up the capital and strengthening the bank’s financial resources (as is being done by most other banking institutions of standing throughout the world) the arrangement made in 1913 constituted a contract under which the Government and the shareholders received respective considerations. The Government obtained its consideration in full at the time, whilst the shareholders obtained theirs only in part. The calling-up of the £3 6s 8d pershare is l necessary in order to make it complete. I therefore expect that upon the return of the Prime Minister and the Minister of Finance, no further delay will take place, and that permission to make the call will be given. I regret, however, that at present no indication can be given you as to tire date when tiro instalments of the call will be payable. STAFF. The chairman has dealt fully with uhe subject of.the staff; but, as'an old i officer connected with the institution for many years and who has passed through all grades of the service, I would like to add that, from the time when the bank attained to a position enabling the board to be liberal with its staff—certainly for the last ten years—the staff, I consider, has been accorded generous treatment. >■ I feel sure that the staff, as a whole, are satisfied with their treatment, not only in the matter of increased emoluments, but also as regards the strengthening ot the provident fund and the increased benefits resulting therefrom, and also as regards prospects of further benefits later on. lit a large staff such as ours—comprising in the colonies alone over a thousand men—there are bound to bo some dissatisfied persons; but in nearly every such case the dissatisfaction is due to the discontented person himself. The cheerful, willing and zealous officer, possessed of ordinary intelligence, will 1 am sure never ‘have amoccasion to complain of the way in which he is treated by the bank. He is bound to make satisfactory progress. I shall again stand for re-election as one of your representatives at the meeting to bo held in December next, and X trust then to receive the samei expression of your confidence which I have hitherto enjoyed.