THE BANK OF NEW ZEALAND.

Star (Christchurch), Issue 16260, 29 October 1920, Page 5

THE BANK OF NEW ZEALAND.

INCREASE OF SHARES. * TRANSFER OP OVER A MILLION FROM RESERVE. « [From Our Correspondent.] WELLINGTON, October 28. An amendment of the Bank of New Zealand Act was introduced in the House to-day- The Minister of Finance stated that he would give ample time for consideration of tho measure before it would bo discussed by the House. It had been approved by the Finance Committee of tho House, the head of tho Treasury and the Auditor of the Bank of New Zealand, who acted in the Government interest, and other authorities. He had been extremely careful with the Bill because it was his first banking measure. The most important proposal was the transfer of part of the bank’s reserve to capital. The present paid-up capital was £2,250,000 made up of 75,000 preferred shares, which belonged to tho Crown, and on which it was at present receiving 10 ■ per cent interest, the maximum under the Act. '['hen there were 37.500 B preference shares, and 225,000 ordinary shares of a nominal value of £1.500.000 The Government interest was first the A shares and secondly the B shares. In connection with the transference of £1,125,000 from the reserve to capital, a certain proportion would go to the Crown and would be added to the B nreference shares, which would give the State an interest in the bank, under the heading of B preference shares, totalling £625,000 “ What is a’med at fir=t of all.” continued :ho Tvernier, “is that whereas our present share in the bank is oneseventh of the total, plus our A shares, wo aim to increase our interest to onethird. “There is another important proposal! The readinstu’ent which will take,place "'ill leave the capital ij )<? bank as follows: A shares. £500.000; B shares, £626 000: and then tbpro will bo 2.250.000 ordinary shares of £1 each.. wfeVb makes .Die capital of the bank £3.375,000. The present ordinary shares of the bank are of the nominal value of £6 13s 4d. It is intended to convert each of these shares into ten of £1 each. The intention is to demo, erntiso the bank and ma]m it what it might to be. a small man’s bank. Of course/shareholders will have the first option of having these new shares, wbmfi will then be offered to the public”' Mr Voitch: They get them at par? Mr Massev: Yes. He went on to say that, the present reserve fund was £2.500 000. but the deduction of the transfer-ad sum would leave it at £1.275 000. So far as he was able to judge the Bank of New Zealand was in an extraordinarily sound position. There we-e manv banks in different parts of the world nns'es'ing larger capital, but in proportion - to its cam’tal lie did not think any bank mold be sounder than the Bank of New Zealand. THE GOVERNMENT’S INTEREST.* AN EXPLANATORY MEMOR ANDUM A memorandum issued subsequent to the previous statement shows that Mr Massey: did not indicate with accuracy the Government’s position under the new conditions of capitalisation. It is ; shown that up till the present the Government’s holding was equal to oneseventh of the bunit’s beneficiary assets. The Bill provides that the dividend on tho Government’s A preference shares shall be henceforth a fixed preferential dividend of 10 per cent. Out of the. new 1,126.000 shares of £1 each to lie issued, there shall be aduecl £375,000 to the Government’s B preference (the present holding of which is £250,000). That is one-third of the whole of the new issue. The Governments proportionate share of the whole beneficiary Interest is thereby Increased from one-seventh to more than one-fifth. The memorandum points out that the Government is at present - entitled to only one-seventh of the reserve funds, and would therefore actually be entitled to only a little more than 160;700 of the new shares to be paid up in full out ot reserve fund. The adjustment of the position which allots to the Government nearly 215,000 more shares than its actual quota, has been arrived at by two provisions: firstly, that the sum distributed in dividends in any year (exclusive of 10 per cent oir A preference shares) shall, up to £300,250) be divided one-scvciilh r.o the Government and six-sevenths to the ordinary shareholders, which is exactly what the Government would receive if this Bill d.d not pass; secondly, that any amount distributed above that sum shall be divided one-third to the Government and two-thirds to the ordinary shareholders. The second provision is a substantial benefit to the Government in comparison with its present share in the divisible profits. The Bill also provides that no further guaranteed stock shall be issued beyond the amount now outstanding. ‘The holder of each old ordinary share and new ordinary share of £G 13 s 4J s fi a ll have issued to him teu ordinary shares qf £1 each on surrender of the old' scrip. The new issue not taken by the Government as already indicated is to bo offered pro rata to ordinary shareholders. , ” The term of directors either representing the Crown or shareholders is increased t 0 three years. The maximum number of shares which may bo held by one proprietor is increased‘from COGO to 60,000, and bis votes increased to a maximum of 2000.