Punjab National Bank announces revision in ratings from ICRA

Punjab National Bank announced that ICRA has placed the ratings of its Bonds on Rating Watch with Positive Implications.

As part of the announcements, Gol has proposed the merger of Punjab National Bank (PNB), Oriental Bank of Commerce (OBC) (rated ICRA A+ / Stable) and United Bank of India (United) (not rated by ICRA), subject to approval by the respective board of the banks. The merger upon implementation is expected to create the second largest PSB in India in terms of business and second largest branch network in India. In addition to the merger announcement, GoI also announced proposed capital infusion of Rs. 16,000 crore in PNB and Rs. 1,600 crore in United, while no capital was announced for OBC (given its relatively better capital position).

The rating watch positive takes into account the proposed capital infusion in PNB by the Gal for FY2020, which is expected to shore up capital ratios while enabling the bank to create provisions on its stressed assets, which will drive improvement in its asset quality and solvency, thereby improving its credit profile.

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