Money & Banking

PNB board to consider ₹5,000-crore capitalmop-up proposal next week

KR Srivats New Delhi | Updated on January 10, 2018

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Punjab National Bank’s board of directors will meet on Wednesday (September 27) to consider capital-raising of up to ₹5,000 crore.

Board approval will be sought for raising Common Equity Tier (CET) capital up to ₹5,000 crore as per Basel-III requirements, sources in the bank said.

It may be recalled that the public sector bank’s shareholders had recently given their nod at an extraordinary general meeting (EGM) on September 12 to raise equity capital of up to ₹3,000 crore to fund business growth.

“We are taking board approval to go up to ₹5,000 crore. The EGM nod is to go up to ₹3,000 crore. The idea is in case there is a possibility to raise beyond ₹3,000 crore, one need not go back again to the board,” sources in the bank said.

The Centre currently holds 65.01 per cent stake in PNB.

On September 27, the bank board is also expected to take a decision on the route for CET raising.

The September 12 EGM resolution empowering the board to decide on the appropriate route came with the condition that the Centre’s shareholding in the bank should not fall below 52 per cent.

Sunil Mehta, Managing Director and CEO, PNB, had in August said that the bank intended to raise ₹6,000-crore capital this fiscal.

While ₹3,000 crore will be pure equity capital, the remaining ₹3,000 crore is expected to be raised in the form of additional tier-I bonds, which also qualify as capital, Mehta had then said.

PNB’s board had on August 2 given its approval for raising equity capital of ₹3,000 crore through follow-on public offer, rights issue, qualified institutional placement, ESPS or ESOP routes.

Of the planned ₹3,000 crore of additional tier-1 capital, PNB has already raised ₹1,500 crore through issue of bonds at a low rate of about 9 per cent.

Besides the capital mop-up of ₹6,000 crore, the bank will also look to raise ₹1,000 crore from the sale of non-core assets, including stakes in some subsidiaries, this fiscal.

Currently, the bank is capitalised at ₹425.59 crore and its capital adequacy, as on March 31, 2017, stood at 11.66 per cent.

PNB had reported a 12 per cent increase in net profit for the first quarter ended June 30, at ₹343.40 crore (₹306.36 crore). This bottomline performance was higher than the March 2017 quarter net profit of ₹261.90 crore.

Published on September 22, 2017

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