Punjab National Bank announced that ICRA has placed the ratings of its Bonds on Rating Watch with Positive Implications.
Aspart 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. Themerger upon implementation is expected to create the second largest PSB in India interms of business and second largest branch network in India. In addition to the mergerannouncement, GoI also announced proposed capital infusion of Rs. 16,000 crore in PNBand Rs. 1,600 crore in United, while no capital was announced for OBC (given itsrelatively better capital position).
The rating watch positive takes into account the proposed capital infusion in PNB by theGal for FY2020, which is expected to shore up capital ratios while enabling the bank tocreate provisions on its stressed assets, which will drive improvement in its asset qualityand solvency, thereby improving its credit profile.
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