Home / Companies / PNB rules itself out of mergers, eyes 6,000 crore from 3 IBC cases

New Delhi: Punjab National Bank has ruled itself out of the next phase of banking consolidation.

Before the 14,356 crore scam, allegedly perpetrated by jewellers Nirav Modi and Mehul Choksi, hit PNB, the Delhi-based bank was considered a front-runner to lead the consolidation drive as the country’s second largest state-run bank.

“The bank is focusing on consolidating its internal operations and does not plan to go for inorganic consolidation at this point," said Sunil Mehta, managing director and chief executive officer of PNB, adding the bank had let the government know its stance.

The bank has reported quarterly losses for three consecutive quarters and is struggling to put behind the effect of the scam.

The bank posted a record loss of 13,417 crore in the fourth quarter of 2017-18 as it made provisions for the fraud as well as for the steadily rising NPAs after the RBI did away with all loan restructuring schemes. This loss was followed by a loss of 940 crore in the first quarter of 2018-19 and 4,532 crore loss in the second quarter.

It is also strengthening its internal processes to prevent a recurrence of frauds. Further, asset quality pressures persist, forcing the bank to aggressively step up recoveries.

The bank, however, is targeting ending the full year in the black. It is banking on recoveries from three major cases that are in the final stages of resolution under the insolvency and bankruptcy code, including Essar Steel, Ruchi Soya and Bhushan Power and Steel. It is expecting to recover more than 6,000 crore from these three companies by the year-end.

Another ray of hope is recovery from sale of assets of Nirav Modi that were attached by the Enforcement Directorate. But given that could be a prolonged legal battle, the bank may not secure any proceeds this year.

After the five associate banks merged themselves with State Bank of India last year, the government in September this year announced the merger of Bank of Baroda, Dena Bank and Vijaya Bank. The timing of the announcement caught everyone by surprise coming less than a year before general elections due in May 2019. The merger of these three banks is expected to be completed by June 2019.

Catch all the Corporate news and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
More Less

Recommended For You

Trending Stocks

Get alerts on WhatsApp
Set Preferences My ReadsWatchlistFeedbackRedeem a Gift CardLogout