The Colonial Bank of New Zealand
On Tuesday the 1st October 1974, the Colonial Bank opened for business on High Street, Dunedin.
The new bank was undoubtedly a result of the euphoria and confidence inspired by Premier Vogel’s immigration policy and public works policies during the 1870’s and perhaps a way for the Dunedin business men to ‘best’ their Auckland colleagues who formed the BNZ. Dunedin, during this time was the largest and most flourishing city in New Zealand with a population over 18,000 (6,000 more than Auckland).
The Colonial Bank prospectus stated that New Zealand needed “a thoroughly Colonial Banking Institution for the whole Colony”. It also pointed out the amount of money held in New Zealand by the Australian owned banks. These banks, the Union Bank of Australia and the Bank of New South Wales among them held nearly two million pounds of New Zealand money. The promoters of the new bank believed that this money should be kept under their own control by New Zealand colonists.
Curiously application forms for shares were to be obtained from and lodged with either the Union Bank or with the Bank of Australasia. Indeed, these banks were bankers for the proposed Colonial Bank.
Among the men on the provisional committee were many well known Dunedin citizens. One of them, H S Fisher, was several times Mayor. B C Haggitt was a prominent solicitor. The editor of the Otago Daily Times, W D Murison was also on the list. Members of parliament such as W A Tomlie, Donald Reid and Matthew Holmes also lent their support. The best known of the provisional committee members was probably W J M Larnach, though best known now for his castle and unfortunate suicide he was also a notable politician.
In 1874 Lanarch was appointed to the Colonial Bank’s first Board of Directors and was still a director when the Colonial Bank was bought by the BNZ in 1895.
Within three months of opening the bank showed a profit of £1,400. Branches had been opened at Palmerston, Christchurch and Invercargill. By August 1875 the number of branches was ten including the sub-branch at Green Island. One of the directors, A W Morris, was on his way to open a branch in London. The profit had risen to over £3,000 but no dividend had yet been paid.
Much of the profit of the Bank was in fact spent opening new branches. However, after the earlier years the average dividend paid to 1895 was about 7%.
During the 1880’s the clouds of depression began to drift over New Zealand. When things worsened during the 1890s the Colonial Bank was forced to close.
In 1893 the Australian crisis caused panic in New Zealand. Depositors hastened to withdraw their money. An important customer; J G Ward Framers Association, borrowed more and more money although the Associations capital was too small to justify this. These two items placed the bank in such a weak position that the BNZ was able to purchase it on favorable terms in 1895.
The Colonial Bank of New Zealand finally closed its doors on 18 November 1895. During its 21 years it had remained a small bank with most of its business customers concentrated in Otago and Southland.
After the Colonial Bank’s closure Bank of New Zealand took over its buildings and most of its business. The staff of the Colonial Bank were offered positions with the Bank of New Zealand if they wanted them.