As part of its efforts to raise capital, Punjab National Bank (PNB) is weighing the options of diluting stake in some of its subsidiaries and selling off real estate assets.
“We have so many investments, we have to take a call at the appropriate time. The bank may consider sale of certain important core assets. We are trying to get their valuations first. We need to decide what to dispose, how much it will fetch,” PNB Managing Director Usha Ananthasubramanian told PTI.
PNB has subsidiaries like, PNB Housing Finance, PNB Gilts, and PNB Investment Services. Besides, it is one the sponsors of the country’s oldest asset management companies, UTI Mutual Fund.
“We have acquired seven banks in the past. We have good real estate but the government needs to support banks,” she said.
As part of the government’s capital infusion plan for public sector banks, PNB got Rs 1,732 crore during the current financial year to meet Basel-III norms.
However, the bank would require more capital to fund its balance sheet growth and address the issue of bad loans.
If the bank goes to the market, it would attract good valuation on account of its strong financial credentials, she said.
“PNB's NIM (net interest margin of 2.75 per cent) is the highest among all large banks. The bank comes with a certain strength. Our operating profit is good. We are working out other issues,” the MD said.
Despite pressure on the bottom line, she said, the bank earned net interest income of Rs 4,120 crore and operating profit of Rs 2,918 crore in the last quarter.
As part of its balance sheet strengthening efforts, PNB plans to sell up to Rs 3,000 crore of bad loans to asset reconstruction companies (ARCs) in the fourth quarter.
“PNB was one bank which was away from this (ARCs) market and did not tap this market in the last six years,” she said. Besides, the bank is organising special camps for recovery at various places.
The bank is also looking at one-time settlement proposals and other measures to reduce bad loans.
