Goldman cuts price targets for public sector banks

A $2 billion fraud at the bank that surfaced days after India's largest lender posted a surprise loss has led to sharp declines in the National Stock Exchange's gauge of state-run bank stocks

Goldman Sachs Group Inc. cut its earnings forecasts and price targets for three of India’s state-run lenders, after the biggest banking fraud to hit the nation.

Analysts including Rahul Jain lowered this year’s earnings estimate for State Bank of India by 1 per cent, Bank of Baroda by 12 per cent and Punjab National Bank by 30 per cent, even after taking account the first tranche of Prime Minister Narendra Modi’s $33 billion recapitalisation plan in their forecasts. Estimates for 2019 and 2020 were also reduced by similar amounts.

Potential risk aversion and a greater focus on operational controls after the fraud