Colonial Bank of New Zealand was a trading bank run from Dunedin, New Zealand which operated independently for more than twenty years. A public company listed on the localstock exchanges it was owned and controlled by New Zealand entrepreneurs and not London or Australian bankers. Still subject to the same vicissitudes as its fellow colonial banks it was bought by the Bank of New Zealand in 1895. It is remembered in the 21st century because its final collapse brought about the suicide of M.P. William Larnach who had been one of its founders.
Inception
Colonial Bank of New Zealand was established in Dunedin, 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 Bank of New Zealand had been founded in October 1861 by a similar local group in Auckland 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. Both Australian banks and New Zealand banks got into difficulties at the end of the 1880s. The Colonial Bank had by 1889 expanded to 27 branches and an office in London. 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. W. J. M. Larnach, M.P. 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.
New Zealand's banks
Together the Bank of New Zealand and the Colonial Bank were New Zealand's only significant local banks.
