THE BANK OF NEW ZEALAND.

Gisborne Standard and Cook County Gazette, Volume II, Issue 205, 6 October 1888, Page 2

THE BANK OF NEW ZEALAND.

RECKLESS AND DISASTROUS FINANCING. BAD MANAGEMENT ON EVERY STRICTURES ON THE DIRECTORS. THE COMMITTEE’S ACTION HIGHLY COMMENDED. Auckland, Thursday. Ths following are extracts from the report of the Bank of New Zealand Shareholders’ Committee, which explain, to a great extent, the present position of the Bank. The principal Australian losses were made in Sydney and Adelaide, where the ohoiea of managers was, to say tha least, unfortunate. In Sydney, after a gambling career long known to most people, the manager was oonvioteJ of embezzling the Bank’s fundi; and in Adelaide money appears to have been advanced, or rather squandered, in a way which can only be characterised as reckless and disastrous. Nobth Island, Niw Zealand.— -In Auckland wc regret to find that, though ths head office of the Bank is there, and its affairs under the immediate eye of the Directors, the general character of much of the business carried on has been most objectionable, and the policy pursued open to grave censure. Inflated schemes or proposals ooming from, or influenced by, certain persons, appear to hare met with ready support by lavish advances to companies and individuals, without adequate security or warrantable prospect of advantage, or even safety to the Bank. Such advances not only account for mors than halt the whole loss now disclosed, but the securities held, being more or less unproductive, curtail the earning power of the Bank, pending their realisation. South Island, New Zbaland. —ln the South ot New Zealand heavy losses in the past, incurred to a large extent through rash or dishonest management, have been so far previously written off and provided for, but securities, in themselves of a sound enough character, have been held without adequate allowance for tali in values, and the deficiency has now to be recognised. And, finally, we find that advances have b?en made to some of the directors upon insufficient security, and from these advances heavy losses have arisen, estimated by us as over £160,000, while certain transactions have come under our notice calling tor the gravest censure it not for more specific action.

The connection between the Bank and the New Zealand Loan and Mercantile Agency Company, by the chief and other officials of lhe Bank acting for the Loan Company, and being interested in the working of both, has not, for many reasons, been advantageous to the Bank, and should on no aqcount be allowed to continue, as we consider the Company has baen unduly favored by the Bank. Ae regards the responsibility for this state of things, the Directors, as your nominees, entrusted with full power over ail the officials and affaire of tha Bank, are no doubt primarily responsible, and beyond remarking that the real control of the Bank’s policy appears to have been for miny years in the hands of a limited circle, with which the late General Manager was intim itely associated, we should probably have said no more on this head, but for the circumstance that on application to that gentleman for explanation if certain accounts lie referred us to the Inspector, who he alleged had been de facto General Manager for five years i.e., since 1883. We have been at soipe pains to clear up this question, and we are of opinion that Mr Murdoch's allegation is not on'y unsupported by the Bank records, but is distinctly neg.;« tived by the Board minutes and other ev'dence. We find, further, that up to 1886, when the Holt frauds were brought to light by Mr Murray, Mr Murdoch was the only official from the head office of the Bank who ever inspected or reported upon the branches in Australia, and that the effective control of that busidess, as well of the aecouMk in New Zeclaqd which caused the bulk losses we now deplore, flid not pass to Mr Murary till the Bank’s money had beep advanced, and the evil virtually done. We think it only due to him and the other senior officers to acknowledge their loyal adherence to the Bank, and their efforts to conserve your interests under circumstances of very exceptional difficulty, TheN.Z. Herald says" Rarely has ths quiet of our financial world been so moved ss by the publication of the Report of ths Shareholders’ Committee of the Bank of New Zealand. The Committee have not belied ths promise ot their appointment, indeed, some will think they have done their duty s little too heroically. That, however, is a matter of opinion ; but of one thing there will bo a pretty unanimous conviction—that if there had bseh any larking weakness yet remaining it would have been brought to light," ’ Wellington, last night. The Bank ot New Zealand report is generally received with much approval. It is considered an houest, outspoken statement of the Bank's position, and regarded as likely—by dispelling a long-continued feeling of doubt and uncertainty, and by convincing people generally that the worst is known and faced—tq improve materially the credit not only of the Bank, but of the colony at large. Dunedin, last night. The Bank of New Zealand report gave rise to much comment here. Opinions are diverse. Many of the business people are of opinion, however, that the worst is now known, and express confidence that the Bank has a satisfactory future before it. CHtirsToiiuaca, last night. The courage and thoroughness with which the Bank of New Zealand's position has boon probed to ths .bottom is much commendsl here. Local shareholders are much gratified with the announcement of the influential London namei in future to be associated with the management ot the Bank,