PNB Shares Plummet After CRISIL Places Its Bonds On "Rating Watch"

In intra-day trade on Wednesday, shares of public sector lender PNB fell as much as 3% on the BSE to Rs. 62.7 against its previous close of Rs. 64.7 after the rating agency CRISIL placed bank's bonds on "rating watch with developing implications".

"Crisil will resolve the rating watch once clarity emerges, post-merger completion, on the merged entity's business and financial profile. Crisil will monitor for potential integration challenges and any impact on the earnings profile of the merged entity," PNB said.

In a regulatory filing to the exchange, PNB said that the rating action has been taken due to the announcement of the government on proposed merger of public sector banks as there has been substantial progress in the matter which includes approval of banks' boards.

Further after the entities merge, their asset quality will be watched. On the resolution of the rating watch, the rating of the merged entity's bond or debt instrument is not likely to move by over one notch, added the bank.

As per the announcement in August this yearUnited Bank of India and Oriental Bank of Commerce will be merged with PNB to become the second-largest public sector bank.

At close, the stock of PNB quoted at Rs. 63.20, down Rs. 1.50 or 2.32% on the BSE.

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