The Hindu Business Line : Basel II: Punjab National Bank needs Rs 3,000 cr

MR S.C. GUPTA (right), Chairman and Managing Director of Punjab National Bank, with Mr P.K. Sharma, Zonal Manager, Karnataka, addressing the media in Bangalore on Thursday. — K. Murali Kumar

Bangalore April 26 Punjab National Bank (PNB) has indicated a capital requirement of Rs 2,500-3,000 crore for migrating to the Basel II regime next year.

Speaking to newspersons here today, the PNB's Chairman and Managing Director, Mr S.C. Gupta, said, "We are still working out our requirements on the basis of the RBI's draft guidelines."

But, he added that even after factoring the capital-raising programme, the capital-to-risk weighted asset ratio would drop to 12.1 per cent from the current level of 12.9 per cent.

Asked what form of capital, the bank would be raising, Mr Gupta said, "Nothing has been decided as yet." But he added that any capital-raising programme would be within the Government stake holding of 51 per cent. The Government stake in PNB is currently about 58 per cent.

London operations

He said that PNB hoped to begin its London operations by early next month.

PNB, he said, had received clearance from the Financial Services Authority, UK's banking regulator, for its UK subsidiary.

The bank intended to open two branches initially and later all over UK. The two branches would initially be in South Hall and in London.

The bank also had planned another subsidiary in Canada, and the banking regulator's clearance was expected soon, he added.

In addition, the bank had planned a full-fledged branch in Hong Kong and offshore operations in Singapore.

Referring to operations for the last financial year (2006-07), he said net profits were likely to be up by at least 20 per cent over the previous financial year's figure of Rs 1,532.17 crore.

PNB had clocked a gross business of Rs 2.39 lakh crore for the last financial year.

For the current year, the bank is targeting a gross business of Rs 2.8 lakh crore, he added. Referring to its foray into life insurance, Mr Gupta said, the insurance regulator's clearance was expected by June this year.

Asked about Vijaya Bank's reservations in continuing in the joint venture, Mr Gupta said, "All outstanding issues have been sorted out. They will be part of the life insurance joint venture."