PNB looking at off-loading stake in subsidiaries to raise fund

As part of efforts to raise capital, Punjab National Bank 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 company UTI Mutual Fund.

"We have acquired 7 banks in the past. We have good real estate but government need to support banks," she said.

As part of government's capital infusion plan for public sector banks, PNB got Rs 1,732 crore during the current fiscal to meet global risk norm (Basel III).

However, the bank would require more capital to fund its balancesheet growth and other addressing 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 percent) 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," she said.

Despite pressure on bottomline, she said, the bank earned highest net interest income of Rs 4,120 crore, operating profit of Rs 2,918 crore in the last quarter.

As part of its balance sheet strengthening effort, PNB plans to sell up to Rs 3,000-crore 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 6 years," she said.

Besides, the bank is organising special camps for recovery at various place, she said.

The bank is also looking at one-time settlement proposals and other measures to reduce bad loans.