Gilt loss shaves Rs 200 cr off PNB books

Punjab National Bank has taken a one-time hit of Rs 200 crore in the second quarter on account of shifting Rs 9,000 crore worth of government securities from the available-for-sale to the held-to-maturity category. The shift will protect the bank from rising interest rates.

"Of our total investment portfolio of Rs 47,000 crore, we have shifted 42 per cent of it to the held-to-maturity category, thus taking a hit of Rs 200 crore. The remaining securities in the available for sale category can withstand a 1.75-2.00 per cent rise in interest rates," said S S Kohli, CMD, on the sidelines of a press conference.

Corporation Bank, Syndicate Bank and UTI Bank also carried out transfer of securities availing the Reserve Bank of India scheme to protect investments from interest rate rises.

PNB will post a positive treasury income for the quarter. But it will be lower than that of Rs 293 crore posted in the second quarter of the previous year, added Kohli. He declined to reveal the exact figures. The Delhi-based bank will announce its results on October 29.

The government is likely to give its approval to PNB's proposed second public issue of 50 million shares today, said Kohli. The issue, which will be priced through book building, is likely to hit the market by December.

The book runners for the issue are Enam Securities, Morgan Stanley, Kotak Mahindra Capital Co, I-Sec and DSP Merrill Lynch.

The public issue will bring down the government's holding in the bank to 67.33 per cent from 80 per cent.