To augment capital base through upper, lower tier II bonds
Mumbai, Aug. 24
Punjab National Bank is planning to raise Rs 1,000 crore worth capital through upper and lower tier II bonds this fiscal to augment its capital base. Addressing reporters in Mumbai, Mr S.C. Gupta, Chairman and Managing Director, PNB, said the bank has already raised Rs 884 crore through Tier II bonds in the first quarter.
The bank has set a target 18-20 per cent growth in deposit and credit for 2006-07 and has achieved 30 per cent of the business by July 2006, he said.
"The strong credit growth in 2005-06 was repeated in the first quarter of this fiscal," Mr Gupta said.
The bank also retired about Rs 4,000-5,000 crore of high cost deposits in the first quarter and substituted it with low cost deposit.
PNB has also insulated its treasury profits by shifting Rs 6,200 crore worth securities from Available for Sale to Held to Maturity in the first quarter. Mr Gupta said that if the current yield levels remain, by September there will no depreciation of the securities portfolio.
According to Mr Gupta, the next three to six months could see slight easing of yields.
The bank has got Reserve Bank of India's approval for a wholly owned subsidiary in London and a subsidiary in Canada called "PNB Canada" and is waiting for approval from the regulators from the respective countries. Apart from these, PNB has also filed applications for an offshore banking unit in Singapore and a branch in Hong Kong.
"By 2007, all these four centres will be ready. The capital required is not more than Rs 400-500 crore and we have adequate capital," Mr Gupta said.
The bank also has plans to open branches in Pakistan, for which it has approached the RBI for approval, he said.
PNB is also looking to set up a life insurance joint venture in which it will have 26 per cent stake. The other partners in the ventures will be Principal Insurance, Vijaya Bank and UK Paints (formerly Berger Paints). The venture is waiting approval from the Insurance Regulatory Development Authority.