The Sun.
London, England, 1859-08-17 00:00:00

JOINT-STOCK BANKS.

The series of half-yearly meetings of the seven
City Joint-Stock Banks was completed on the 4th
inst. by the meeting of the London and County
Bank. A brief glance at a few of the points pre-
santed in the half-yearly reports of the directors
may not be altogether uninteresting.
First, as the amount of deposits and current ac-
counts :—the figures relating to each Bank are
subjoined :

London and Westminster
London Joint-Stock
Union Bank of London
London and County
Commercial Bank
City Bank 1,886,532
Bank of London

Total £39,835,242
Compared with the returns made at the 31st De-
cember, 1858, there is an laggregrate increase of
£637,681, or 2 per cent., and compared with those
at the 30th June, 1858, an increase of £646,774, or
also about 2 per cent. On the 30th June, 1859, she
Bank of England minimum rate of discount was 3
per cent. ; on the 31st Dec., 1858, 2/, and on the
30th June, 1858, 3 per cent. The alteration in the
value of money during the period embraced in the
comparison has not been of a character to affect
the aggregate amount of deposits.
A comparison of the amount of deposits and cur-
rent accounts held by each bank at the three periods
mentioned shows the following changes :—Lon don
and Westminster Bank, an increase of £230,621,
compared with 31st December last, but a decrease of
£747,309, compared with the 30th June, 1858 ; Lon-
don Joint-stock, an increase of £354,490 compared
with 31st December, 1858, but a decrease of £565,411
compared with 30th June,lBsB ; Union Bank, a de-
crease of £464,402 compared with 31st December,
1858, but an increase of £649,829 compared with
30th June, 1858 ; London and County, an increase of
£355;066 compared with 31st December, 1858, and
an increase of £440,909 compared with 30th June,
1858 ; Commercial Bank, a decrease of .£24,523 com-
pared with 31st December, 1858, and a decrease of
£56,721 compared with 30th June, 1858 ; City Bank
an increase of £136,785 compared with 31st of De-
cember, 1858, and an increase of £634,282 compared
with 30th June, 1858; and Bank of London, an in-
crease of £49,644 compared with 31st December,
1858, and an increase of £291,194 compared with
30th June, 1858. The result of this comparison is
that, of the older Banks, the London and County
are making the most satisfactory progress as regards
the extent of general business. The London and
Westminster and London Joint-Stock during the
first six months of 1859 have only partially re-
covered the business lost during the last six months
of 1858. The Union Bank, on the other hand, have
parted with two-thirds of the sum which was
added to their balances at the 30th June, 1858. The
progress of the young City Bank is remarkably
rapid; the increase in the deposits, &c., since the
30th June, 1858, amounts to fully 50 per cent. The
Bank of London have increased their balances by
27 per cent. within the same period. Each of these
two Banks was established in the year 1855. The
paid-up capital in each case is the same as that of
the Commercial—viz., £300,000. An inquiry into
the means by which the two young establishments
have already far outstripped the Commercial, fifteen
or sixteen years their senior, might be interesting
to the shareholders in the latter.

As regards dividends, the principal feature con-
sists in the inability f the London Joint-Stock
Bank to make up the rate of dividend (121 per cent.
per annum) declared, at the corresponding period of
last year without resorting to the objectionable plan
of drawing upon the guarantee fund to the extent
of £4,762. At the corresponding period of last year
we may remark, the dividend and bonus together
were at the rate of 221 per cent. per annum, and for
the last six months of 1858 at the rate of no less
than 324 per cent. per annum, making thus
274 per cent. for the whole year 1858. The cir-
cumstance that the profits for the last six months
are inadequate to a dividend at the rate of 124 per
cent., and allow of no bonus at all, seems to demand
some explanation beyond that assigned by the di-
rectors, viz. ; the depreciation in the market value
of the " Government and other available securities
held by the Bank." In any case the serious fluc-
tuation in the dividend impresses the necessity of
adopting a different mode of valuing these securi-
ties. Bank dividends ought not to be thus closely
dependant upon the " ups and downs" of the mar-
ket. The guarantee fund of the establishment,
after the deduction of £4,762, amounts still to
£201,147 ; but this sum is not large in relation to
the sum of £9,722,212 due by the Bank to their
customers. Most persons hold the opinion that a
Bank guarantee fund aught not to be drawn upon
in order to make up dividends. The fall which
took place in the price of the shares upon the an-
nouncement of the directors' recommendation indi-
cates that a good deal of disappointment was occa•
sioned. A more legitimate mode in which large
accumulations under the head of guarantee fund
may be dealt with is that pursued by the Union
Bank of London, who have this half yeas capitalised
£120,000 of their reserve fund, representing £2 per
share, whereby the total paid-up capital entitled to
dividend is increased from £600,000 to £720,000.
It must be remarked, to the credit of the Union
Bank, that they have atoned for former shortcomings
by adding, for the last 12 months, the very large
sum of £45,000 to the reserve fund. After the capi-
talisation of £120,000, the balance at the credit of
this fund consists of £108,152 Consols, worth now
upwards of £lOO,OOO. Some other Banks that we
know of would have announced a large addition to
the dividend, though aware that the increase would
not be permanently maintained, and that it would
occasion injurious fluctuations in the price of to
shares.
_ _

After all, however, the real criterion of the rela-
tive degree of security offered to their customers by
these establishments rests withthe amount--whether
in cash, money " at call," or Government securities
—held immediately available for any emergency,
however sudden. Regarded from this point of view
the balance-sheet of the London Joint-Stock Bank is
decidedly the least satisfactory of any. Pursuing
their practice of giving as little information as pos-
sible, the managers record that they hold £1,387,038
in " Exchequer-bills, India Bonds and Debentures,
and Government Stock," but when we look further,
with a view to ascertain what amount of cash they
have likewise available to meet the £9,722,212 of
customers' balances and deposits, we are left to
gather such information as we may. from this por-
tentous entry—" By cash, loans, bills discounted,
and other securities, £9,166,546." The practice of
the London Joint-Stock Bank in this respect is dis-
countenanced by that of every other establishment.
The London and Westminster Bank, against
£11,696,436 of deposits, &c., show £1,978,867 in
Government-stock, Exchequer-bills, and India
Bonds," and £895,237 " cash in hanl," making to-
gether £2,874,104, or equal to 25 per cent. of their
liabilities to the public. The Union Bank show
" cash in the bank, at the Bank of England, and at
call, £1,711,745 ;" also " Government Stock, Exche-
quer-bills, and City Bonds, £717,000" (besides the
amount of the guarantee fund), making together
£2,428,745, or equal likewise to 25 per cent. of
their deposits. The Bank of London have, in " Go-
vernment securities, India Debentures, and cash in
hand and at call." a sum equal to 31 per cent. of
their liabilities, and the Commercial a sum equal to
27 per cent. In the case of the City Bank, the
amount held in " Exchequer-bills, India Bonds, cash
in hand, at Bank of England, and at call," is equal
to only 18 or 19 per cent. of the deposits and cur-
rent balances. The inference is that the managers
consider themselves warranted in retaining in
hand a relatively smaller cash reserve than that
held by either of the other banks. The London
and County Bank, however, occupy by far the
strongst position, and issue the most detailed
and most satisfactory balance-sheet. They show
" By cash on hand, at head office and brancheQ,
£550,926 ; cash placed at call and at notice,
£829,837 ; investments in Government and gua-
ranteed stocks, £462,945; ditto in other stocks
and securities, £118,036." These sums make an
aggregate of
£1,961,745, being equal to no less than
42 per cent. of their liabilities.—Daily News.

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