The public sector Punjab National Bank (PNB) will float its maiden public issue around August but the exact size and the premium will be decided at the time of the issue, according to merchant bankers.
The bank, in its application to the Securities and Exchange Board of India (Sebi), however, had indicated a premium of Rs 61-75 per share of Rs 10 each. The size of the issue, accordingly, works out to between Rs 497 crore and Rs 595 crore.
Merchant bankers said this is the only major public issue lined up in the next couple of months.
PNB will offload 7,00,00,000 equity shares of Rs 10 each.
PNB said the issue is aimed at augmenting its networth and raising long term resources. The bank is expected to make an announcement on the issue after it declares its results for the last financial year.
Analysts pointed out that PNB will need to augment its networth through a public issue because its risk weighted assets are expected to increase significantly over the years.
Increase in tier I capital through retained earnings alone may not be sufficient for the bank to maintain an adequate capital adequacy ratio.
Internationally, banks maintain a capital adequacy ratio of well over 10% as a sound banking practice, analysts said.
The capital adequacy position of the bank as on March 31, 1997 was 9.15% as against the RBI stipulation of 8%.
Earlier, in 1996-97, the bank had made a private placement of five year, unsecured redeemable bonds aggregating Rs 189.98 crore to raise long term resources.
Earlier in the year, PNB had restructured its share capital by returning Rs 138.33 crore to the government.
The money was part of the capital PNB received from the government on January 1, 1994, against redemption of an equivalent amount of 10% recapitalisation bonds subscribed to by the bank.
The government, however, continues to hold 100% shareholding in the bank after the return of capital.
The stake will come down after the public issue.
