At the same meeting, the bank s Board of Directors appointed Maurits Cornelis van Hall and Ottomar Haupt as branch managers and also appointed the members of the Advisory Council: Gideon Maria Boissevain, Joseph Cahen, Alexander Isac von Hemert and Marius Hendrik s Jacob Marius. The managers and the members of the Advisory Council officially took up their posts on 1 February 1872.

The capital budgeted to run the Amsterdam branch was fixed at four million francs (two million guilders), which was quite close to the five million francs budgeted for the Brussels branch and a good deal more than the one million allocated to the Geneva branch.

In February 1872, the Board gave its approval for the purchase of Holjé & Boissevain in Amsterdam; this was the first Dutch acquisition made by the new bank.

Capital and cash flow questions

In February, the branch ran into difficulties with the Nederlandsche Bank, when time came to open an account with the central bank to receive the income from the bills discounted there. The central bank argued that the branch s two million guilders64 of allocated capital was an insufficient sum, given the volume of business being transacted. Negotiations with the central bank resulted in its accepting a commitment from the members of the Advisory Council that no funds from the branch would be transferred out of the Netherlands without three months prior notice. However, when informed of the situation, the Banque de Paris et des Pays-Bas Board of Directors duly warned, during a meeting on 19 February 1872, that the Board rejects any idea of a capital increase.

The issue of the adequacy of the branch s basic capital came up time and again. Later that year, it resurfaced in the context of an exchange of correspondence between the branch and Paris management. The branch was granting loans to banks, financial institutions and private individuals guaranteed by a pledge from the borrower consisting of portfolios of bonds issued by public authorities, this cover representing 110% of the advances made. As these advances were rather large amounts, the issue of how they were being financed was raised. Caught in a difficult situation, the Board of Directors told the branch that it would either have to find the necessary financing on the local market or else reduce the amount of capital it was committing to these transactions.

Risk policy and branch management

In December 1872, the attention of headquarters management was drawn to the volume of loans being granted by the Amsterdam branch for which securities were pledged as collateral. The whole question of how to refinance the Amsterdam lending and the related question of capital adequacy now also became a question of risk management. In

64. By way of comparison, the founding capital of the Nederlandsche Credit- en Deposito Bank in 1863 amounted to ten million guilders.

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