§ Mr. BUTCHER
asked the Chancellor of the Exchequer whether he will state precisely what remains to be done in the winding-up of the Deutsche, Dresdner, and Disconto-Gesellschaft Banks, respectively, and in particular what is the amount of the outstanding liabilities of each bank to creditors other than enemy alien creditors; and whether there is any reason for carrying on the business of these banks after such outstanding liabilities have been paid or provided for?
§ Mr. McKENNA
With the permission of the House, I will take this opportunity of making a short statement with regard to the affairs of the banks in question.
Very shortly after the commencement of the War the carrying on of banking business by enemy subjects in this country was prohibited under the Aliens Restriction Order, and enemy banks were in consequence closed as far as banking business was concerned.
Additional steps were, however, taken with respect to the three German banks—the Deutsche Bank, the Dresdner Bank, and the Disconto-Gesellschaft—and two Austrian banks—the Laender Bank and the Anglo-Austrian Bank—with a view to collecting and dealing with their assets and paying off British, Allied, and neutral creditors. In consequence a licence was issued which permitted anything to be done which was necessary for making the realisable assets of the banks available for meeting their pre-war liabilities to British, Allied, or neutral creditors, and for discharging those liabilities so far as practicable, but nothing more.
Since that date, this realisation of assets for the purpose of the discharge of liabili- 1330W ties has been regularly proceeded with, and has been practically completed; British, Allied, and neutral creditors have been paid off, and arrangements have been made for the immediate payment in the case of the Deutsche Bank to the Bank of England of a sum of£375,000, representing the approximate surplus assets of the bank together with the transfer of securities which are at the absolute disposal of the bank itself as apart from its customers. This deposit is subject to an undertaking on the part of the Treasury to provide for any liability which may subsequently be disclosed or matured.
Apart, however, from the realisation of assets and payment of creditors, arrangements have been made for disposing of the various securities and balances by the bank, the effect of which will be, as regards British, Allied, and neutral customers, to break the connection of the bank with those customers; and as regards enemy customers, to vest their property in the custodian.
The first step in this operation has been taken by means of instructions being given to the banks as to the disposal of those securities, and by a vesting Order in general terms as to securities which are to be vested in the custodian.
The securities have to be sorted out into various classes:
- (1) Securities which are at the absolute disposal of the bank. These go to the Bank of England as part of the surplus assets of the bank.
- (2) Customers' securities:
- (a) securities the absolute property of an enemy free of the bank's lien. These go to the custodian;
- (b) securities the absolute property of British, Allied or neutral customers
1331 free of lien. These are returned to the customers;
- (c) securities held in the name of other branches of the bank or the head office for persons unknown. These are handed over to the Custodian, with notice of any lien of which the bank have knowledge;
- (d) securities subject to the bank's lien. The bank have been instructed to give notice to their customers in these cases that unless the customer gives special instructions or sends a remittance to cover the debt, the securities are liable to be sold so far as necessary for the payment of the debt. After satisfying the bank's lien the securities are treated in the same way as securities free of lien;
- (e) securities which are the property of British, Allied, or neutral customers who are technically enemies owing to their residing in or carrying on business in enemy countries. Arrangements have been made for allowing these securities, on being claimed by the customer, to be handed over to a British or neutral bank in this country, an undertaking being given by the bank that they will hold them till the end of the War and make no advance against them while the customer remains technically an enemy.
The process of the realisation of assets and discharge of liabilities has been completed in the case of the Deutsche Bank, and, in the case of the Dresdner Bank and the Disconto Gesellschaft has been so far completed that practically all the creditors have been paid with the exception of the Bank of England.
When it is realised that in the case of these three banks debts have been collected and assets realised in all parts of the world, and that the sum paid to British, Allied, and neutral creditors amounts approximately to£20,000,000, it must be seen that no time has been wasted in dealing with these banks.
The disposal of the securities still remains to be completed, and must inevitably take time. The securities have to be sorted into the different classes mentioned above, instructions have to be taken from customers, and the title of customers has to be considered; all involving correspondence carried out under very difficult conditions.
The approximate value of the securities held by the three banks is about 1332W £20,000,000, consisting of every sort of security. Before these securities are lodged with the Custodian, full details are required, including the distinctive number of every share and bond held and their approximate market value.
It is impossible, of course, to deal with these securities and to gain the information necessary to carry out the instructions given to the bank:—
- (1) without the assistance of the general managers of the bank;
- (2) without a considerable staff of trustworthy persons;
- (3) without keeping possession of the bank's premises, in which the securities are kept under Sir William Plender's control.
The matter is being proceeded with with all possible dispatch.
To sum up,—In the first place, by the exertions of the persons in whose hands the control of the affairs of these banks has been placed, all British, Allied, and neutral creditors of the banks have been paid off or provision made for their payment, up to an amount, as mentioned above, of about£20,000,000. This, of course, would have been quite impossible under any other arrangement, such as the compulsory winding-up of the banks.
In the second place, the disposal of the securities held by the banks—a step which involves the severance of their connection with their British, Allied, and neutral customers—is being proceeded with, and is within a measurable distance of completion.
And, thirdly, considerations of the same character apply to the vesting in the Custodian of securities owned by enemies and held by the banks.
Sir H. DALZIEL
asked the Chancellor of the Exchequer whether Sir William Plender is solely responsible for the manner and means by which the assets of the German banks in London are disposed of?
§ Mr. McKENNA
Any transactions of the German banks in London under their licence are subject to the supervision and control of Sir William Plender, who was appointed for the purpose by the Treasury. He has absolute discretion:
- (a) to refuse to permit any payment that may appear to him to be contrary to the interest of the nation;
- (b) to permit any such new transactions as are in his opinion necessary or desirable for the purpose of the completion of the transactions first mentioned in paragraph 1;
- (c) to permit or to refuse to permit the completion of any particular transaction whatsoever.
In performing these duties Sir William Plender has been in constant consultation with the officials of the Treasury. The task has been a very heavy one, and anyone acquainted with its details would realise how much the country owes to Sir William Plender for his work in this connection.
§ Mr. JOYNSON-HICKS
asked the Chancellor of the Exchequer what properties are held in London by the three German banks now under control; whether any of such properties are held on behalf of German shipping companies; and what steps have been taken to dispose of them?
§ Mr. McKENNA
The only freehold premises held by the banks are those of the Deutsche Bank in Lombard Street. The deeds relative to these properties are held by the Public Trustee. The Dresdner Bank holds a lease of premises in Old Broad Street and the Disconto-Gesellschaft of premises in Cornhill, both of which are partly let. The Disconto Gesellschaft further holds as trustee for the Hamburg-Amerika line a lease of certain premises in Cockspur Street which have recently been in Government occupation. Particulars of this property have been returned to the Public Trustee in compliance with the Trading With the Enemy (Amendment) Act, 1914, and it is open to any British creditor of the Hamburg-Amerika line to apply for a vesting order in respect of it as a means of securing the payment of his debt. The property is not an asset of the bank.