The Hindu Business Line : PNB in race for Kazak bank

Bangalore, Oct 17 The public sector Punjab National Bank (PNB) is in the race for acquiring a bank in Kazakhstan. Speaking to newspersons here on Friday, the PNB Chairman and Managing Director, Dr K. C. Chakrabarty said, “We see big opportunities there after the Indo-US nuclear deal as the region has sizeable uranium deposits.”

PNB, he said, was looking for a bank with the capital size of about $25 million. PNB was prepared to consider an outright acquisition or a 51 per cent major ownership in the bank, he said. “We intend to complete the deal at the earliest,” he said. He, however, declined to identify the target bank in the region.

Expansion plans

Dr Chakrabarty said that the PNB had also proposed to start a joint venture bank in the Bhutan. PNB has made an application with the Royal Bank of Bhutan, he said. A decision was expected shortly, he added.

In addition, PNB planned to start a subsidiary bank in Vancouver, Canada. This was in view of the large non-resident population in Canada. The bank also planned to increase its presence in Shanghai, by upgrading its representative office to a full-fledged branch, he added.

CRR cut impact

Referring to the impact of the 250 basis points reduction in the Cash Reserve Ratio, Dr Chakrabarty said PNB’s working resources would increase by around Rs 4,700 crore. The weighted average cost of working funds as a result was already down to 5.8 per cent, he said.

The benefit of the liquidity was being passed to the bank’s customers through a reduction in the retail lending rates and through a hike in deposit rates. PNB cut lending rates to the retail segments by 50 basis points on Friday.

However, Dr Chakrabarty said, “We have no immediate intention of bringing down the benchmark Prime Lending Rates, with corporates borrowing at rates above PLR.” Corporate borrowing continued to be robust, he added. Only in the commercial real estate segment, PNB had reduced exposure to just 6 per cent of the gross advances.

Dr Chakrabarty said, PNB was unaffected by the current tight liquidity conditions in the financial markets. PNB, he said, was flush with funds. “In fact we are a lender in the call markets supporting our competitors,” he explained.

PNB, he said, had anticipated the crisis and had consciously built up liquidity. The bank had raised resources through certificates of Deposits (CD). Last month, PNB had raised CD resources at rates close to 12 per cent.

Currently, bulk deposits, including CDs comprise about 20 per cent of the deposit mix, he added. He said that the PNB’s Net Interest Margin was in line with the target for the current year.

PNB had targeted a NIM of 3-3.5 per cent for the year. He said that that PNB’s business had grown by 20 per cent in the last quarter on a year on year basis. Net profits during the period also had grown by 20-22 per cent over the same period, he added.

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