Moody's places PNB under review for downgrade

The scam came out into the open on 14 February 2018, when it informed the stock exchanges.

Photo: AFP/File

Mumbai: Following the biggest scam in the country's banking sector to the tune of Rs 11,340 crore at state-run Punjab National Bank (PNB), Moody's today placed the lender under review for downgrade. The agency has a Baa3/P-3 rating on the Delhi-based lender now while it has a Baa3 rating on its foreign currency issuer rating. The bank overall has a Baa2 rating with a stable outlook now from Moody's. The review for downgrade will focus on: (1) the timing and quantum of the financial impact of the fraudulent transactions, (2) any management actions taken to improve the capitalization profile of the bank, and (3) any punitive actions taken by the regulator on the bank, Moody's Investor Service said. It has also placed the bank's baseline credit assessment (BCA) and adjusted BCA of Ba3 and the counterparty risk assessment (CRA) rating of Baa3(cr)/P-3(cr) under review for downgrade. [You may like to read] OPINION: 'Heera hai sada ke liye' but only if you are NOT buying synthetic diamonds "The primary driver for today's rating action is the risk of weakening standalone credit profile of PNB, as a result of a number of fraudulent transactions" through fake letters of undertakings issued by the bank to other lenders worth USD 1.8 billion over the past many years, Moody's said. The scam came out into the open on 14 February 2018, when it informed the stock exchanges.