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Punjab National Bank (PNB) wants to continue to hold at least 26 per cent stake in PNB Housing Finance Ltd (PNBHFL) even if the latter were to raise capital to fund growth in the coming days, according to a top official.
“PNB has 32 per cent. We won’t go below 26 per cent. Our brand (PNB) will continue, and in case of requirement, we will not hesitate to support. PNB Housing Finance is a good brand and we would like to take advantage of the brand in the days to come,” Ch SS Mallikarjuna Rao, Managing Director and CEO, told BusinessLine .
Rao said that PNBHFL was looking at tapping the market to raise equity and whenever it does so PNB will not look at any positive divestment. PNB will only look at automatic stake reduction (by not participating in the PNBHFL capital-raising effort), and this reduction will not go below 26 per cent from existing 32 per cent now.
“Strategically, we have asked them (PNBHFL) to go to market only after March results,” he added.
Life insurers
Meanwhile, Rao also said that PNB will continue with its shareholding in both PNB MetLife Insurance as well as Canara HSBC OBC Life Insurance (CHOICE) for the next few years. After its amalgamation with Oriental Bank of Commerce ( OBC) and United Bank of India from April 1, OBC’s 23 per cent shareholding in CHOICE has been transferred to PNB.
“Right now we are not looking at an exit. We would like to run both the life insurers for the next few years. Both have strong franchise. In the next few days, we will like to sit with them and work out the business strategy for both of them. At this point, we have no plan to divest stake in both, and there is also no condition from the insurance regulator IRDAI to exit,” said Rao.
It may be recalled that PNB is a promoter shareholder of PNB MetLife and has been holding a stake of 30 per cent since 2012. Already, PNB has a tie up with Life Insurance Corporation for selling the latter’s products through PNB branches.
Rao said that PNB was earlier eyeing a credit growth of 8 per centin 2020-21, but now in the wake of Covid-19, has reduced its target to 6 per cent growth. In FY20, the state-owned bank’s advances portfolio grew 4 per cent, he said.
On non-performing assets, Rao said there were SMA2 accounts to the tune of ₹1,800 crore as on March 1 that could not pay by March 31. This is the main impact of Covid-19 as on date, he added.
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