The board of Punjab National Bank has approved a fundraising proposal to raise as much as Rs 10,000 crore through a mix of equity and debt.
The bank, which recently merged Oriental Bank of Commerce and United Bank of India wsith itself, can raise capital via issue of equity shares and Basel-III-compliant Tier-II bonds “by way of private placement, qualified institutional placement, further public offer, rights issue, etc.", according to an exchange filing on Thursday.
PNB will seek shareholders' approval for the fundraising for an amount up to Rs 7,000 crore in the forthcoming annual general meeting. The bank is planning to tap the capital markets in the fourth quarter of the ongoing fiscal.
The bank has a capital adequacy ratio of 14.14 % at the end of March 2020.
Post-Merger Synergies
The PNB board has approved appropriation of accumulated losses of Rs 28,707.92 crore from the share premium account of the amalgamated bank.
Following the amalgamation with Oriental Bank of Commerce and United Bank of India on April 1, PNB 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.
PNB's holding has exceeded 10% in six companies and five ventures capital funds. The Reserve Bank of India has accorded approval to hold these investments and directions given by the central bank will be implemented within the given time frame, it said.
"The situation continues to be uncertain and the bank is evaluating the situation on an ongoing basis. Major challenges would arise from eroding of cash flows and extended working capital cycles. PNB is gearing itself on all fronts to meet these challenges," the state-run lender said in the regulatory filing.
Despite these events and conditions, it said there would not be any significant impact on the bank's results in the future and going concerns assumptions as presently made.
On Thursday, PNB shares fell 0.40% to Rs 37.10 apiece on the BSE while the benchmark Sensex rose 1.12% to end the day at 36,737.69 points.
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