Transactions linked to the Dutch East Indies
The Amsterdam branch participated in a number of deals linked to the Dutch East Indies. In 1918, it was a member of a syndicate which underwrote the issue of 5 million guilders of new shares in the Nederlansche Indische Handelsbank72. The following year, the branch participated for an amount of 150,000 guilders in an identical capital-raising operation.
In 1920 the branch took part for the modest sum of 50,000 guilders in a placement syndicate for new shares in Rubber Cultuur Maatschappij Amsterdam (RCMA), a company which had been founded in 1907 to exploit the vast plantations of hevea (rubber trees) in Java and Sumatra. That same year the bank participated for the same amount in a capital increase operation for the Nederlandsche Indische Gas Maatschappij.
When the Dutch government issued a bond in 1926 (consolidating previous 1919 and 1921 loans) for 148 million guilders, the branch joined the syndicate, underwriting 8 million of the total. This deal was a great success, making 88,714 guilders for the branch. The bank then agreed to send 8,000 guilders to help the victims of the Sumatra earthquake of June 1926.
During 1927, the branch took part in a 50 million guilder loan to the Dutch East Indies and also a placement of bonds issued by the Nederlandsche Indische Gas Maastschappij. The branch s participation in both these deals was modest compared with the deals that were carried out during the following years: a 69 million guilder loan to the Dutch East Indies in 1929, for which the branch underwrote 3,343,000 guilders; and 100 million loan in 1931, where it participated for an amount of 3,400,000 guilders.
Sometimes the Bank took stakes in new companies, as when Soengei-Oelar Oliepalmen Cultuur Maatschappij was set up. This company was founded under the aegis of the Nederlandsche Handel-Maatschappij, for the purpose of oil palm cultivation on Sumatra. The branch purchased 250,000 guilders worth of stock in the company, which was capitalised at 4,610,000 guilders, and was accordingly given a seat on the Board.
Business relations with the Nederlandsche Handel-Maatschappij
The Amsterdam branch had for many years maintained business relations with NHM, which was a major financial institution of some importance due to the role it played in financing trade between the Netherlands and the Dutch East Indies. In addition, a number of the members of the branch Advisory Council were NHM directors or former directors and they brought business to the branch.
72. The Nederlansche Indische Handelsbank was founded in 1863 for the purpose of financing trade between the Netherlands and the Dutch East Indies. The bank became Nationale Handelsbank in 1950 and was purchased by Rotterdamsche Bank in 1960. The Netherlands-based activities were then incorporated into Rotterdamsche Bank, while its subsidiary, Mercantile Bank of Canada, was sold to First National City Bank in New York. The branches in Asia were bought by Chase Manhattan Bank in New York, which then sold the offices in Japan on to Chicago-based Continental Illinois.
Foreign loans issued in the Netherlands
During the 1918-1940 period, a large number of foreign borrowers chose to issue their loans in the Netherlands. There were a number of factors influencing this decision.
The Netherlands was and is a rich country and was then seen as stable and safe. The Netherlands is also the country which stayed longest on the Gold Standard.
In addition there were very few restrictions on raising loans on behalf of foreign beneficiaries. They could be issued in all foreign currencies and there was no withholding tax.
Finally, the Dutch capital market was highly sophisticated and enjoyed an excellent reputation.
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