THE BANK AMALGAMATION.

Timaru Herald, Volume LVII, Issue 6064, 25 September 1894, Page 3

THE BANK AMALGAMATION.

1 (Br Thlbobaph.) WELLINGTON, Sepibmbeb 24 The following oorrespondonoa relative to the proposed bank amalgamation was laid on the table of the House to-night by the Colonial Treasurer ; — No. I:—The1 :— The Colonial Treasurer to Mr John Murray and the Hon George McLeaD, Wellington. " Colonial Treasurer's Office, " Wellingtoo, 22nd Sept., 189*. " Gentlemen,— l have the honour to acknowledge the receipt of jour letter of the 11th inst, covering proposals for amalgama. tiou between the Bank of New Zealand and the Colonial Bank. In reply, I have to state that the matter hai received the careful comideration of the Government. Without m any way committing the Government to any fixed oaurse or approval of the proposals, it will be neceieary— (l) If any legislation is undertaken by the Government that it shall be of a permiesive character, to enable the Government to be aatiafiol be< fore assenting tj the amalgamation that the general interests of the oolony are ooneerved and protected. (2) That m addition to the scrutiny whioh was proposed m the memorandum of agreement, the (3ov< ernment appoint a special representative or representatives inicpondent of either bank to examine and report to the Government on the various acsounta and assets proposed to be dealt witb. (3) The shareholders of each bank to be responsible for and So make good all -losses on existing business that is not passed by the colon/a valuers. (<t) That Upon tho expiration of ten years the profits of the combinod banks shall still continue to be paid into tho Estates Company .until any 1 deficit m ths winding up of the Estates Company ie iiquidatod, the Government lien upon the interest! of the shareholders m the Bank of Now Zealand to be o.ntinuous until all liability to the colony is at an end. (5) The Govern* ment to nominate the chairman and two directors of the Estates Company, and the shareholders of the Bank of Now Zealand to nominate two directors to same said Board, |to have full control over the uncalled oapital of £1,500.000 of the Bank of New Zealand shareholders. (6) In addition to the appoint* ment of the president and auditor to the Bank of New Zealand, the Government to appoint one dirootor to the combined bank. I should like to have your reply to the fore* going before noon on Monday. The Government will then further consider the matter, ani decide what course th»y deem it detirI able to take. " I have, &o, «J . G. Wabd, Coloniil Treasurer," No 2 :— J Murray to the Colonial Treasurer, Wellington. " Bank of New Zealand, 11 Wellin|ton, 24tb September, 1894. "Sir,— l have the honour to acknowledge receipt of your letter of tho 22nd September having reference to the amalgamation of the Bank of New Zealand and tha Colonial Bank of New Zealand, and setting forth certain supplementary condition* as neossssrily pre* oedent to any action therein by the Gome ment. These conditions (1 to 4 inclusive), I would be willing to recommend to the bank shareholders, but I greatly regret that I cannot ssy so of IS os. 5 and 6, nor do I think even were I to recommend them that the shareholders m the Bank of New Zealand would entertain them. It will probably make the position more clear if I begin with 6, which is that — ' In addition to the appointment of the president and auditors to the Bank of New Zealand, the Government to appoint one direotor to the combined bank.' In considering this stipulation I would ask the Government to bear m mind that the Bank of New Zealand shareholder* are responsible for the future of tho bank, not only to the extent of their large paid up capital, but future profits, without limit of time, and reserve liability of £1,500.000, because under the terms of the provisional agreement 4 p>r cent, is to be debited to the Estates Company on account of the large item ' share aooounr, 1 and m consideration therefor tho surplus profits, after a dividend of 6 percent, and £20,000 to the reserve, eve to be returned to the Sstatea Company. Now should there be inefficient management, the oonsequenoe would appear m the amount of surplus to be paid over to the Estates Company, for the outcome of which tha shareholders are liable m the great sums I have named, whilo with only four directors on the now board to tbs Colonial Bank, three of the director* sad the presi. dent (also a director) nominated by the Government, the Bank of New Zealand shareholders would be m a minority though primarily liable for the rosults, and would be a£ the meroy of persons not of their own appointment to manage the bank, the Government maintaining the audit and power of veto on objectionable busines?. To take (he ordinary management 0n.5 of fche control of tho shareholders while yet holding tbim responsible for its r«(ult», would, I feel sura, be regarded by them a» inequitable. The ; explanations I have given above will serve to make clear the reason why olause 5 also would not be assented to. The shareholders being held responsible to the extent of over £2,000,000 cannot I submit; be reasonably expected to part with the control of their property to a person m whose selection they have no say, and to hand over to him the power to make calls upon them, dearly as betweon the two appointed on eaoh side, the ohairman would exercise, at least at regards the shareholders, supreme power. At the same tjm.9 I ifie^L sure th»t tb«re will be no objection made to .the #OT/jrnmenb taking an effeotire part, if they with, m the management of tha Betates Company . £n sanolnsion I desire to point Gufc that an errjon.eous im r preseion has been disseminated that legislation is m some way necessary to free the bank from (he Estates Company. Except as ft oondition of amalgamation made by the Colonial Bank, there it no suoh necessity. It j.t already a separate oompany, and separately administered though to a large extent under tha bank control* As to its being a burden on the bank, ifc U only so m the sense of being a .burden' pa thp i bank shareholders, which it must of riecessit't fsmain until it be liquidated, unless the #ojooy were to relievo them, which nobody I "I have, etc,, { ~ '.'jFOSfl MUBSAY."

No3:-Hon Mr MoLean to the Colonial Treasurer. 1 " Dunedia, 24th September, 1894. " Sir,— l hive the honour to acknowledge the receipt of your letter of the 22nd September, and have submitted the oontents to my . colleagues htre. In reply lam detirod to state that the conditions imposed by you make the scheme such as vre oould not reoomme&d to our shareholders, taking the olauses of your letter seriatim, (1) we do not objeot to the permißsive character of the proposed legislation. (2) We havo not the slightest objection to your appointing representatives to examine the condition of our accounts and aiiets, and refer you to our letter of 2fltb July ; when applying for a share of tbe Government aooount we specially asked tbe Government to do this before giving us that share. (3) This stipulation is ail right and was fully provided for m the agreement ; so far as a scrutiny by the other bank was concerned we hare no objection to its application to suggest a further sorntiny. (4) This so vitally affect* the interests of our shareholders that we will not under any c'roumstanoeß agree to propose it to them ; it would be an invitation to spread the realisation of the assets cf the company over an indefinite period, and would make our shareholders' dividends responsible beyond what can fairly be asked or was ever intended ; tbia bank will have no voice m the management or realisation of the assets regarding the Government lien on the interests of the present shareholders m the Bank of New Zealand. (5) This does not immediately ooncern up. (6) The powera possessed by the I Government representative on whose report the acceptance by the Government of the whole fcheme will depend, must be held to be sufficient ; it is obvi )us that the presence of a nominee of tbe Government on the board would detrimentally affect; the business of the bank. Tbe final clause— tho ascent to amalgamation on the part of tbe Colonial Bank — would greatly depend upon tbe shareholder! being represented m tbe amalgamated institution by men m whom they bad confidence, Without this guarantee there would be little proepeot of obtaining the necessary con sent. The attitude which the direotors at tho general meeting on Wednesday must take up with regard to the proposed amalgamation will evidently largely depend upon the answer whioh we receive to this,io that I must ask you to reply as definitely as possible on the whole affair not later than noon tomorrow. " I have, ets.. "Geo. MoLhan." No 4 : -The Colonial .Treasurer to Mr John Murray, Wellington. " Wellington, 24th Bopt , 1894. " Sir, — The Government have carefully considered your communication of tc-jay, and m reply I have the honour to inform -ou that they cannot see thtir way to depart from the conditions numed m my letter of the 22nd mat. "I have, etc., " J. G. Wabd, Colonial Treasurer." No. 5 s— The Colonial Treasurer to tho Hon. G. MoLean, Dunedin* ' Sir, — The Government have carefully considered your communication of to-day and m reply I have the honour to inform you that they cannot tee tbeir wa^to depart from the condition! sained m my letter of the 22nd mat. " I hare, etc., " J. 9. Wabd, Colonial Treasurer." In asking leave to hy the bank amalg»ma» tion correspondence on tbe table Mr Ward said that he would like to say m the first place that the communications whioh had passed from the Government to tbe two banks had been unanimously arrived at by the Government. Tho rumours whioh had prevailed as to strained relations between tho Premier and himielf m couneotion with this important matter were entirely without foundation. Not only had there been no diversity of opinion, but thoy had been m absolute accord m what waa done by tbs Government. Ho wished alto to point out how difficult and how imposiible it was to carry out the requests of hon meonbers to have the matter referred to a select oommittee. The respocei bilities m Ibis matter rested with, the Government, and to have intercepted their jadgment or tbeir oonolusion on the matter by relegation to a oommitte? would have arked the House to place a buffer between the Government and the country. He might say that while the Government recognised all tbe advantages that would aoorue to the colony by araalgation, they took up the position of sayiog that the first consideration the Government had to look to was what was best m the interests of the colony. It would be seen that the Government regarded it: as essential that the interests of the oolony should be preserved and safeguarded beyond anything else. The correspondence would disclose tho fact that the proposals made to tha Government by the two bankß were not regarded by tbe Government m some of the most essential features as sufficient to warrant them m oomenting to some of tbe prpposils, and he hoped that hon members when they saw what had been done by tbe Government, would give them the oredit of doing what wbs right and m the interests of the oolony.

OHBISTOHUEOH, Bbpibmbjb 23.

A special general mooting of the Canterbury Chamber of Commerce was held to. day to sonsider the propoaed bank amalgamation. Representatives of the Indui trial Arajoiation, Liberal Association, and Employers' Assooia* tion wore present by invitation. It was resolved :— " I'hat m the opinion of this meeting Parliament should decline to ratify any scheme for amalgamation of the Bank of New Zealand with the Colonial Bank which entails upon the taxpayers of the colony the responsibility of making good any ultimate defioiency after liquidation m the assets of either bank " Mr 9 G Stead, who propoaed the resolu* tion, said that no one would object to amalgs* matioo, wbioh m all probability wouid be a souroe of strength to the banks and to that extent would be of service to the colony, but he ohjeoted to the proposal that the taxpayers should be eaddlod with the unrealisable assets of one bank to relievo its shareholders of their responsibility and thus improve their position at the expense of the colony. Be could Dot understand how the gentlemen oonneoted with this movement had the audaoity to ask tho people of New Zealand to corns to the resoue of the sharehodlers m a pint stock bank m this way. It wjb all very well for . Mf ; Murray to a»y that an undertaking m point of fact already existed under the two million guarantee. At present the colony was liable for £2,000.00,0 on the preferential share guaranteed by the Government, and if the worst came to the worst they coujd only lose that sum. If the colony took the proposed guarantee m respect of the Estates Company upon it, it would be impossible to say how muoh it would lose. No prudent man or set of reen would take the respjnsibi'ity of endorsing a bill m blank, which was practically what the colony was asked to. do. He thought that they had quite enough to do with their own r.egponeibjUjtijes without taking unprofit* able factories and 'unsaleable farms on thrir hands. He detailed the history of the Estatej Company, and quoted figures to bud> port his argument, that it was highly inex» j'edient that the colony should aocede to the proposal of the banks m the matter. It- was decided to send copies of the resold* tion to the Premier and the Christohurch members.