Before 1861 New Zealand was served by only two banks, the Union Bank of Australia Ltd and the Oriental Bank Corporation. The headquarters and main business of both institutions lay outside New Zealand, and they were represented by only a handful of branches in the country, located at a few of the principal settlements.
Early in 1861 the Oriental Bank withdrew from New Zealand (closing its doors on 10 May) and the Bank of New South Wales seized the opportunity shortly afterwards of coming to New Zealand and opening for business.
For some time though many New Zealand residents and business people had been thinking about setting up a New Zealand Bank, and when prominent businessman Thomas Russell was refused an account with the Bank of New South Wales he decided the time was right to open his own bank – a bank for New Zealand.
On 10 June 1861 a meeting was held to discuss the establishment of the new bank, and less than two months later a Deed of Settlement was signed and the Act incorporating ‘The Bank of New Zealand’ was passed.
The Act allowed the new corporation to carry on all the usual activities of a bank, and ‘The Bank of New Zealand’ was also empowered to issue its own banknotes.
The company was founded just in time to take advantage of the gold finds, like Gabriel Read’s discovery in Otago in 1861, which were beginning to be made in various parts of New Zealand and led to the Central Otago gold rush.
The wild rush of thousands of new arrivals endeavouring to make their fortune presented a timely opportunity for a bank to provide useful services for miners and business people alike, and a fruitful source of revenue for itself.
Representatives of the Bank of New Zealand headed south to open branches and agencies in Otago, while others visited the principal towns and settlements around the country to establish the Bank – in many cases at places where no bank had been before.
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