The Colonial Bank of New Zealand was a trading bank headquartered in

Dunedin Dunedin ( ; mi, Ōtepoti) is the second-largest city in the South Island of New Zealand (after Christchurch), and the principal city of the Otago region. Its name comes from , the Scottish Gaelic name for Edinburgh, the capital of Scotland. Th ...

, New Zealand which operated independently for more than 20 years. A public company listed on the local stock exchanges it was owned and controlled by New Zealand entrepreneurs and not

London London is the capital and largest city of England and the United Kingdom, with a population of just under 9 million. It stands on the River Thames in south-east England at the head of a estuary down to the North Sea, and has been a majo ...

or Australian bankers. Still subject to the same vicissitudes as its fellow colonial banks it was bought by the

Bank of New Zealand Bank of New Zealand (BNZ) is one of New Zealand's Big Four (banking), big four banks and has been operating in the country since the first office was opened in Auckland in October 1861 followed shortly after by the first branch in Dunedin in D ...

in 1895.

History

Colonial Bank of New Zealand, Dunedin MA I306385 TePapa

Colonial Bank of New Zealand was established in

, New Zealand in April 1874 as a public listed company. Dunedin with its involvements with the South Island's gold mining was the major source of local capital for New Zealand's entrepreneurs. The

had been founded in October 1861 by a similar local group in

Auckland Auckland (pronounced ) ( mi, Tāmaki Makaurau) is a large metropolitan city in the North Island of New Zealand. The List of New Zealand urban areas by population, most populous urban area in the country and the List of cities in Oceania by po ...

and, to pull capital north, it had opened a branch in Dunedin in December 1861. The Colonial Bank of New Zealand may have been formed just to re-capture the Bank of New Zealand's South Island business. In the 1860s and 1870s capital was brought into New Zealand by the government and others. There was plenty of employment, development moved quickly and very good prospects brought property prices to high values. In the 1880s prices of staple products fell very low, the rabbit pest cut wool production and the government cut expenditure on public works by 75 per cent. Land fell to half its former value and that was impossible to realise, many runholders and businessmen were ruined and the working classes were unable to purchase goods or pay their debts. There was no dairying or frozen meat industry. Investors withdrew their capital. The Colonial Bank had expanded to 27 branches and an office in

by 1889. Trading banks got into difficulties in both Australian and New Zealand at the end of the 1880s. There was a major financial slump in 1893 and negotiations began to amalgamate the Colonial Bank with the Bank of New Zealand. In 1895 the Bank of New Zealand took it over then, finding itself in major difficulties, the Bank of New Zealand was obliged to let the Colonial Bank collapse in 1898.

William Larnach William James Mudie Larnach (27 January 1833 – 12 October 1898) was a New Zealand businessman and politician. He is known for his extravagant incomplete house near Dunedin called Larnach's castle by his opponents and now known as Larnach C ...

who had been one of the promoters and owned a substantial shareholding bought more shares just prior to the collapse to show his confidence in its survival. Learning of the collapse he shut himself in one of parliament's committee rooms and shot himself dead. The business was liquidated by 1901 and the company dissolved in 1905.The Colonial Bank
''Otago Daily Times'' 3 May 1905 page 3

References

Companies based in Dunedin Defunct banks of New Zealand Banks disestablished in 1898 New Zealand companies established in 1874 Banks established in 1874 {{Bank-stub