REVEALED! These 5 large banks are likely to sell shares to institutional investors

Five large banks are looking to shore up their capital base amid the coronavirus pandemic impacting the economy. These five large banks, including SBI, PNB and BoB, are likely to sell shares to institutional investors in the second half of this fiscal, as per a report by news agency PTI.

Qualified Institutional Placement (QIP) would be the most preferred way and public sector banks are likely to take a call on taking this route after finalisation of their second quarter results, merchant banking sources said. According to the sources, banks would get a better picture about their Non-Performing Assets (NPAs), one-time loan restructuring and consequent ratings latest by the end of October, the PTI report said. Subsequently, banks can start the process of deciding the time, quantum, appointment of merchant bankers and other formalities, the sources said.

Four to five large banks like State Bank of India (SBI), Punjab National Bank (PNB), Bank of Baroda (BoB) and Union Bank of India would look at raising capital towards the end of third quarter or during the fourth quarter of this fiscal, they added. Further, the sources said these banks have to plan capital raising in such a manner that there is no crowd out of liquidity and enough space is available to both domestic and global investors to participate in various QIPs. PNB has already expressed its intent to hit capital markets in the fourth quarter this fiscal to raise funds to help meet growth needs and regulatory requirements.

"We will be planning (capital raising) somewhere around the end of third quarter or beginning of fourth quarter. By this time, we would have declared two quarterly balance sheet of the amalgamated entities," PNB Managing Director S S Mallikarjuna Rao told PTI in June. It is to be noted that private sector banks, including ICICI Bank, Axis Bank and Kotak Mahindra Bank, have already mobilised capital thr0ugh QIPs in the last three months.