PNB to raise Rs 1000 crore through Tier-1 bonds

12 Dec 2022 , 10:23 AM

Punjab National Bank (PNB) intends to issue additional tier-1 (AT1) bonds to raise Rs 1,000 crore in capital. 

The managing director and CEO A Goel says: While capital sufficiency is beyond regulatory standards, the bank would prefer to maintain an appropriate capital pool to enable credit expansion. Debt servicing costs for tier-1 bonds, a type of debt, are lower than those for servicing equity capital.

At the end of September 2022, the lender with headquarters in Delhi had a capital adequacy ratio (CAR) of 14.74 %, Common Equity tier-1 (CET-1) of 10.88 %, and AT1 of 1.32%. 2.54 % represented tier II.

The bank’s board has already given the go-ahead to raise Rs 12,000 crore in capital. According to Goel, of this amount, Rs 5,500 crore is tier-1 capital, and Rs 6,500 crore is tier-II capital. It has already raised roughly Rs 2,658 crore of tier-1 capital in the most recent quarter that ended in September 2022 out of the Rs 5,500 crore.

On December 1, 2022, it issued bonds to raise Rs 4,000 crore in tier-II capital at a rate of 7.89%. Goel stated that the base size and green-shoe option for the tier-1 offering would both be Rs 500 crore. Market conditions would determine the precise amount and timing of the bond issue.

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