PNB to merge PNB Gilts with self

Punjab National Bank (PNB) will now merge its primary dealership subsidiary PNB Gilts with self instead of selling the company, a senior PNB official said today. Punjab National Bank holds 74.07 per cent stake in PNB Gilts.

“We have decided to merge it with the bank, as the value offered to us by interested parties was not up to our expectations,” Ranjan Dhawan, chief general manager, PNB, said. Shares of PNB Gilts surged by 10.05 per cent to Rs 23 on the news. “We will soon initiate the necessary legal process for the merger, and hope to complete it sometime in the next financial year (2009-10),” Dhawan said.

PNB Gilts, a primary dealer in government securities, underwrites primary issues of government’s dated securities, treasury bills and state government securities. It also deals in public sector undertaking bonds, inter-corporate deposits and money market instruments.

The bank’s earlier decision to exit the primary dealership business was part of its plan to exit non-core businesses. In July, PNB had invited bids to sell controlling stake in PNB Gilts, and had appointed Enam Securities as an advisor for the stake sale.

For the quarter ended December 31, PNB Gilts posted a net profit of Rs 140 crore on an income from operations at Rs 195 crore. At 11:26 am, shares of Punjab National Bank traded at Rs 403.55, 0.75 per cent higher than close Friday, while those of PNB Gilts were at Rs 23, 10.05 per cent up.