Struggling to raise growth capital following a monutnain of bad loan provisions, state- run Punjab National Bank (PNB) has appointed merchant bankers to sell a controlling stake in PNB Housing Finance, a top bank official has said.
The deal is expected to be finalised in the next few,months, the official added. Last week, the bank and Carlyle Group, which owns over 32 per cent in PNB Housing Finance, had announced their plans to sell at least 51 per cent stake in the company.
"We have just appointed the merchant bankers and are in the process of doing due diligence now," managing director and chief executive Sunil Mehta told PTI here today.
While PNB owns 32.79 per cent stake, Carlyle Group through its investment arm Quality Investment Holdings, owns 32.36 per cent in the Delhi-based PNB Housing Finance.
market transaction. When asked about the timing of the deal, Mehta said the bank will go to the market to offload the stake in the housing finance subsidiary at the right time.
Whether stake sale will happen in the second/third quarter, Mehta said, "yes, if the market condition is right and if we are able to get the right valuation, it may happen (in the second or third quarter)...It all depends on market conditions."
The bank is also looking to list its life insurance arm, PNB MetLife Insurance. PNB MetLife has as its shareholders MetLife International Holdings, PNB, Jammu & Kashmir Bank, M Pallonji & Company and other private investors. But Metlife and PNB own the majority.
Early this year, the bank had set a target of raising Rs 8,000-10,000 crore by selling non-core assets. Mehta said the bank is revamping its internal processes to mitigate risks and to improve asset quality and profitability.
Meanwhile, the bank today opened it's second centralised loan processing centre here. "These centers will segregate functions of sourcing and processing of loans. With this, there will be greater element of transparency and better asset quality," Mehta said.
He said the bank has set a recovery target of Rs 22,000 crore in the current financial year. In the first quarter, its recovery was above Rs 8,000 crore compared to Rs 5,600 crore it had recovered during the entire FY18.
In the April-June quarter, the bank got over Rs 3,000 crore only through the NCLT resolution process. "We have set a total target of Rs 22,000 crore of recovery in the current financial year and we are more than confident of achieving it. In the first quarter itself, it was over Rs 8,000 crore and the second quarter recovery may ben around Rs 10,000," Mehta said.
In Q2, the lender expects Rs 3,500 crore from NCLT resolution process, he added. The fourth-biggest lender by assets had reported the industry's worst losses for the March quarter at Rs 13,417 crore following the over Rs 14,356-crore Nirav Modi scam, against a net profit of Rs 261.90 crore a year ago.
The losses would have been over Rs 20,000 crore had the bank fullt made provisions for the loss incurred on account of Modi fraud. Of total amount of Rs 14,356 crore lost through the fraud, the bank has made provisions only for 50 per cent or Rs 7,178 crore in the fourth quarter of FY18.
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