PNB to adopt 4-pronged restructuring strategy

Punjab National Bank (PNB) has embarked on its second round of restructuring "" essentially a four-pronged strategy to make it strong enough to counter competition.

"Boston Consulting Group), which was engaged to do a study on ways and means of improving the bank's profitability, has recently suggested a four-pronged strategy," S S Kohli, chairman and managing director, told reporters at the sideline of a press conference to announce the bank's second public offering, in Kolkata today.

"The strategy involves centralisation of the backoffice, a hub-and-spoke set-up, where all data operations would be centralised at a single centre. The second step would be to do a detailed study of the profitability of all products on the shelves, which would be followed by corrective actions to align them with the market scenario," he added.

"The third strategy would be to undertake an integrated risk management system to followed by an organisational revamp," the chairman said. Organisational restructuring would involve a study of different tiers of the bank.

"PNB has a four-tier system, which include branches, regional offices, zonal offices and headoffice. We are looking at the possibility of reducing one or two of these system," Kohli said.

Meanwhile, PNB has also decided to return three crore shares to the government after the issue. At the public issue it will offload eight crore shares through a bookbuilt process.

About the business prospects of the bank, Kohli said PNB expected to touch a total business of Rs 1,60,000 crore by March 2005 against Rs 69,000 crore in the previous year.

On non-performing assets, Kohli said PNB has already written off around Rs 350 crore of bad assets this year, while another Rs 650 crore of doubtful and bad assets were upgraded and recovered.

Net NPAs of the bank has already touched 0.3 per cent in December 2004, in absolute terms it was Rs 137 crore and in gross terms stood at Rs 4,180 crore.