The Hindu Business Line : PNB to raise Rs 500 cr via upper tier-II bonds

Punjab National Bank plans to raise fresh capital of Rs 500 crore by issuing upper tier-II bonds on a private placement basis, taking the overall capital raised by the bank this fiscal to over Rs 2,600 crore.

The latest bond offering would open on Tuesday and the bank would have the option to retain oversubscription, an official said. Already this fiscal, PNB had raised Rs 1,100 crore through issuance of tier-I perpetual bonds in three rounds and Rs 1,010 crore from upper tier-II bonds in two separate offerings.

PNB is now looking to raise resources through tier-II capital as it has enough headroom there. Long term subordinated debt and certain reserves constitute tier-II capital, which can equal the size of tier-I capital. Debt capital can be raised through issue of upper tier-II debt instruments up to 25 per cent of tier-I capital.

Dr K.C. Chakrabarty, PNB’s Chairman and Managing Director, had already made it clear that Government equity in the bank would not be reduced during the current fiscal. As on end-December 2007, the Centre had 57.80 per cent stake in PNB.

PNB’s capital adequacy ratio at end-December 2007 stood at 14.04 per cent compared with 12.90 per cent at end-December 2006.

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