Punjab National Bank (PNB), the country’s second-largest public sector bank, plans to raise Additional Tier-1 (AT-1) capital of ₹2,500 crore via bond offering by March 15, said a top official.
This will be on top of the ₹495 crore that the state-owned lender raised via AT-1 (Basel III-compliant) capital bonds a few days back with a coupon of 8.6 per cent per annum on a private placement basis, SS Mallikarjuna Rao, Managing Director & CEO, PNB, told BusinessLine .
Including this, ₹495 crore, PNB has now raised ₹8,283 crore out of the ₹14,000-crore capital that it last year set out to raise from the market.
This ₹14,000 crore comprised Qualified Institutional Placement (QIP) of ₹ 7,000 crore; AT-1 capital of ₹3,000 crore and Tier-2 capital of ₹4,000 crore.
Already, PNB has raised from the market aggregate Tier-2 capital of ₹4,000 crore (in July, September and November 2020).
It maybe recalled that the bank had, in December 2020, raised ₹3,788 crore via QIP, which fell short of the announced targeted mop-up of ₹7,000 crore. The amount raised included ₹1,500 crore investment from LIC.
Asked if PNB will look to raise the remaining portion of QIP aim during the current fiscal, Rao said bank will look for an appropriate time for raising the gap of about ₹ 3,212 crore.
“Of the ₹14,000 crore, we have already raised from the market ₹8,283 crore. The additional Tier-1 capital of ₹2,500 crore also I am very confident of doing it by March 15. The only gap that will need to be filled is about ₹3,200 crore via QIP, which will also happen at an appropriate time,” said Rao.
Rao said he had earlier taken a bold call for aiming for ₹7,000 crore via QIP when the issue size was only ₹3,500 crore with a green shoe option of ₹3,500 crore. “We have to also look at the market appetite. It is not that we fell short. It’s just that my aim was bold and high at ₹7,000 crore. We had raised ₹3,788 crore via QIP,” he said.
Rao highlighted that PNB was comfortably placed on the capital front and had no constraints of capital for growth. “We are raising more capital from market so that we can focus on growth for the next few years. The growth we will look at comprises post-pandemic growth as well as growth flowing from synergies of the amalgamation. This was the objective for going for ₹14,000-crore capital raising from the market,” said Rao.
Three-way merger
On the three-way amalgamation with Oriental Bank of Commerce and United Bank of India, Rao said that IT system integration was complete and upgradation of surrounding technologies such as loan origination system and anti-money laundering system applications would be done by March 31 this year. Business synergies of the amalgamation should start flowing from April 1 this year, he added.