Business Daily from THE HINDU group of publications
Tuesday, Jul 03, 2007
ePaper
Business Daily from THE HINDU group of publications Tuesday, Jul 03, 2007 ePaper |
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Money & Banking
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Mergers & Acquisitions
M. Ramesh Chennai, July 2 Punjab National Bank is considering merging its subsidiary, PNB Gilts, with itself, the bank’s Chairman and Managing Director, Dr K.C. Chakrabarty, told Business Line today. The bank feels that while subsidiary is profitable, the return on net worth is very small. PNB Gilts’ turnover of Rs 121 crore for the year 2006-07 was less than its paid-up equity of Rs 135 crore. Its net profit, Rs 16 crore, was only 3 per cent of the net worth of Rs 506 crore. According to the information available with the BSE, Punjab National Bank has a 74.07 per cent stake in the Rs 135-crore paid-up equity of PNB Gilts. “We are only examining it at present,” Dr Chakrabarty said. He was here in connection with a customers’ meet. Interest rates
Answering a question, Dr Chakrabarty said he expected interest rates to fall but not much. But the rates could also go up considerably due to externalities, such as oil prices going up. Asked what this meant to a banker, he said that banks were in the business of financial intermediation. Banks would raise interest on loans if resources become costly. Investment front
On the investment front, Dr Chakrabarty said that Punjab National Bank was well protected against interest rates rising, as 88 per cent of the investment book of Rs 45,190 crore was in the ‘held to maturity’ category. The bank would suffer depreciation on investments anywhere between Rs 100 crore and Rs 150 crore in the current quarter. Dr Chakrabarty, who took over as the Chairman and Managing Director of the bank a month ago, said that his immediate priority was to tackle NPAs. NPA slippage was Rs 2,100 crore last year. He said that he would also leverage PNB’s brand to achieve financial inclusion about which “no one talks in Northern India”.
More Stories on : Mergers & Acquisitions | Financial Services | Public Sector Banks | Punjab National Bank
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