PNB seeks consultants to sell bank’s real estate assets

Punjab National Bank (PNB) is looking to appoint consultants who will help identify the bank’s real estate assets for sale and carry out the sale process. Sources close to the development said properties for sale – both land and buildings – are being identified on an ongoing basis.

PNB was one of the anchor banks which amalgamated smaller banks in the last round of mergers. Effective April 1, Oriental Bank of Commerce (OBC) and United Bank of India stand merged with PNB and the sale exercise may be aimed at better management of the real estate portfolio of the merged entity. The sale will be carried out for two categories of assets. Category A will consist of properties priced between Rs 25 crore and Rs 150 crore while Category B will comprise assets worth more than Rs 150 crore.

After PNB’s Q1FY21 results, chief executive SS Mallikarjuna Rao told analysts that the bank had already identified certain real estate assets for sale, especially those where there is duplication of branches and offices. “While specifically the OBC head office we will be retaining, but if you are aware in Bhikaji Cama (Place), we were having an old head office that we have already identified for sale and one floor was already sold and other things are in the line,” Rao said, adding that PNB has identified assets worth Rs 500 crore for sale by March 31, 2021.

Apart from sale of immovable properties, PNB has received board approval for raising Rs 14,000 crore through market instruments. Of this, Rs 4,000 crore is to be raised through tier-II bonds, Rs 3,000 crore through additional tier-I (AT-I) bonds and Rs 7,000 crore via a qualified institutional placement (QIP).

The bank raised tier-II bonds worth Rs 994 crore in July and Rs 1,500 crore in October. It plans to raise another Rs 1,500 crore via tier-II bonds and the full amount of AT-I bonds by the end of the current month. The QIP is likely to be launched in the second or third week of December, Rao said.