PNB gets board go-ahead to tap market for raising Rs 10,000 crore

The Government of India currently holds 85.59 per cent stake in the bank.

State-owned Punjab National Bank (PNB) on Thursday said its board has approved a proposal to raise Rs 10,000 crore through a mix of both equity and debt.

Besides, the board has cleared opening balance sheet of the amalgamated bank as on April 1, which is post amalgamation of Oriental Bank of Commerce and United Bank of India into PNB, the bank said in a regulatory filing.

The board has given its nod for "raising of capital through issue of equity shares and Basel III-compliant tier-2 bonds by way of private placement, qualified institutional placement (QIP), further public offer (FPO), rights issue or any other mode or through a combination thereof up to an amount of Rs 10,000 crore".

The bank will seek shareholders' nod for raising of equity capital for an amount up to Rs 7,000 crore in the forthcoming annual general meeting.

The Government of India currently holds 85.59 per cent stake in the bank.

The country's second-largest lender PNB is planning to hit capital markets in the fourth quarter of this financial year to raise funds to help meet growth needs and regulatory requirements.

The bank has a capital adequacy ratio of 14.14 per cent at the end of March 2020.

The board also approved appropriation of accumulated losses of Rs 28,707.92 crore from the share premium account of the amalgamated bank.

Bank unions oppose mega bank merger, to go on strike on March 27

Venkatachalam alleged that govt's decision to merge 10 banks would lead to the closure of six banks - Andhra Bank, Allahabad Bank, Corporation Bank, Oriental Bank of Commerce, Syndicate Bank and United.

All India Bank Employees’ Association (AIBEA) and All India Bank Officers Association (AIBOA) have decided to go on strike on March 27 against the government's decision to go for a mega bank merger, which was approved by the Cabinet on Wednesday.

“Banks are themselves facing problems due to the huge pile of bad loans.

While the public sector banks made a total gross profit of Rs 150,000 crore for the year ended 31-3-2019, because of total provisions towards bad loans, etc amounting to Rs. 216,000 crore, the banks ended with a net loss of Rs. 66,000 crore,” said C H Venkatachalam, general secretary, AIBEA.

“Can anyone believe that the merger of banks will result in recovery of the huge corporate bad loans?

Rather, as we saw, after merger in State Bank of India (SBI), bad loans in SBI have gone up. These banks are facing the same risk now,” he said.

Meanwhile, Venkatachalam alleged that the merger of 10 banks simply meant that six banks - Andhra Bank, Allahabad Bank, Corporation Bank, Oriental Bank of Commerce, Syndicate Bank and United Bank of India would be closed down.