PNB plans to hit capital market in Q4, says MD Rao

The country's second largest lender Punjab National Bank is planning to hit capital markets in the fourth quarter this fiscal to raise funds to help meet growth needs and regulatory requirements.

At the moment, the bank is sufficiently capitalised with the capital adequacy ratio of 14.14% at the end of March 2020, PNB Managing Director S S Mallikarjuna Rao said.

"However, we will finalise the opening balance sheet of amalgamated entities in the next board meeting in July. Probably then the bank will get an actual estimate of the capital (requirement)," he said.

"We will be planning (capital raising) somewhere around end of third quarter or beginning of fourth quarter. By this time we would have declared two quarterly balance sheet of the amalgamated entities," he said.

Besides, he said, the bank has a lot of headroom available in terms of AT 1 and Tier II bonds.

PNB amalgamated Oriental Bank of Commerce and United Bank of India with itself effective April 1 this year. With the merger, the bank now has about 11,000 branches, more than 13,000 ATMs, one lakh employees and a business mix of over Rs 18 lakh crore. Total domestic business of PNB at the end of March 2020 stood Rs 11.81 lakh crore.

Rao said that both the amalgamated entities Oriental Bank of Commerce and United Bank of India have booked losses in the fourth quarter ended March 31.

The losses were mainly due to provision against bad loans, he said, without giving numbers as they have not been made public.

In the last two financial years, most of the public sector banks got major financial support from the government in terms of capital infusion thereby eliminating the need for raising capital from the markets.

For example, the government infused Rs 16,091 crore capital in PNB during 2019-20 and Rs 5,908 crore in the preceding year. As a result, the government holding in the bank post September rose to 83.19% as against 75.41% at the end of March 2019.