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Moody’s, Fitch may downgrade $1.8 bn fraud-hit PNB (Lead)
New Delhi, Feb 20 (IANS) Already reeling under $1.8 billion fraud blow, the Punjab National Bank (PNB) on Tuesday got another shock from two top rating agencies Moody’s and Fitch who are mulling to downgrade the bank’s ratings.
Fitch Ratings has placed PNB Viability Rating of ‘bb’ on Rating Watch Negative (RWN), following the $1.8 billion fraud detected in the bank, an official statement said here on Tuesday.
Moody’s Investors Service placed under review for downgrade PNB local and foreign currency deposit rating of Baa3/P-3 and foreign currency issuer rating Baa3, an official statement said.
Fitch clarified that it would resolve the Rating Watch once more clarity emerges on the extent of control failures and the impact on PNB’s financial position.
“At this stage, Fitch does not view this event to have an impact on PNB’s Support Rating Floor (BBB-) due to the bank’s high systemic importance as the second-largest state-owned bank. We believe that the state’s propensity to provide extraordinary support to PNB remains high, subject to the sovereign’s ability, which is captured in India’s sovereign rating of ‘BBB-‘,” Fitch said.
PNB, the second largest public sector bank in India, had detected a $1.8 billion fraud in one of its branches in Mumbai in January. The amount of fraudulent transactions is equivalent to eight times the bank’s net income of about Rs 1,320 crore ($206 million).
“The RWN reflects the possibility of a downgrade of PNB’s Viability Rating following the detection of a large fraud in one of the bank’s branches amounting to $1.8 billion. While the exact financial impact from this event is still being ascertained, it has raised questions on both internal and external risk controls as well as the quality of management supervision considering that the fraud went undetected for several years,” the rating agency said.
“Significant control failures that attract substantial management time to rectify would be likely to weaken our view of risk appetite and management, and result in a downgrade of the viability rating (VR),” it said.
Moody’s said “likely financial impact of the fraudulent transactions is the key driver for the review for downgrade.”
At the same time, Moody’s has placed the bank’s Baseline Credit Assessment (BCA) and adjusted BCA of ba3 and the Counterparty Risk Assessment (CRA) of Baa3(cr)/P-3(cr) under review for downgrade.
Moody’s said the review for downgrade will focus on: the timing and quantum of the financial impact of the fraudulent transactions; any management actions taken to improve the capitalisation profile of the bank, and any punitive actions taken by the regulator on the bank.
“Moody’s assumes a very high probability of government support for PNB in times of need, resulting in a three-notch uplift to its deposit and issuer ratings from its BCA. In the review for downgrade, Moody’s will also assess government support for the bank’s deposits and senior unsecured debt.”
Given the review for downgrade, Moody’s said it is unlikely to upgrade PNB’s ratings over the next 12-18 months.
“Nevertheless, Moody’s could affirm the ratings, if the financial impact of the fraudulent transactions is much smaller than what Moody’s anticipates in this rating action, and/or if the bank manages to strengthen its capital position to a level above the minimum regulatory requirements — including the capital conservation buffer — under Basel III standards, and/or the bank returns to profitability on a sustainable basis,” the statement added.
–IANS
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Dr. Abhishek Verma Dedicates a Shelter in Memory of His Mother, Veena Verma, at KGMU; Inaugurated by Daughter Nicolle Verma
World-renowned business tycoon Dr. Abhishek Verma has supported Foodman Vishal Singh’s Hunger-Free World mission. In memory of his mother, Late Veena Verma, who was a 3 term Rajya Sabha MP.
Dr. Verma dedicated a state-of-the-art free permanent shelter for the attendants of patients at KGMU Medical University, Lucknow, under the aegis of Vijay Shree Foundation. His daughter, Nicolle Verma, inaugurated the shelter.
During the event, Foodman Vishal Singh honored Nicolle Verma by presenting her with a memento. Mrs. Nidhi Sharma and Avantika Yadav, associated with the organization, welcomed her with garlands. Following this, Nicolle Verma distributed essential items to the attendants and also handed out fruits. She became emotional remembering her grandmother on her birth anniversary.
On this occasion, she also inaugurated the “Veena Verma Sevalaya” in memory of her grandmother, Veena Verma, to serve the attendants. She expressed, “I feel proud that my family is engaged in nation-building as well as social service. Today, in collaboration with Vijay Shree Foundation founder Foodman Vishal Singh Ji, I feel immensely proud to dedicate this shelter for the poor, helpless, and needy attendants of patients battling serious illnesses like cancer. I am honored to be associated with the Hunger-Free World Mission for humanity.”
Inspired by the continuous humanitarian service provided by Vijay Shree Foundation over the past 17 years, Nicolle Verma donated 10 lakh rupees to support the cause. The purpose of this donation is to ensure that services continue for the needy attendants of patients suffering from severe illnesses in hospitals, as facilitated by Foodman Vishal Singh.
It is noteworthy that Dr. Abhishek Verma’s family has a legacy of public and philanthropic service. They are helping millions to carry forward the values and service work of their parents. On the occasion of his mother’s birth anniversary, Dr. Abhishek Verma dedicated this state-of-the-art permanent shelter at Lucknow Medical College to serve the attendants of patients through the Vijay Shree Foundation.
Supporting Foodman Vishal Singh’s Hunger-Free World mission, Dr. Abhishek Verma assured that he would continually support keeping this flame of humanity alive. He also promised to assist in providing medicines to the helpless patients.
Continuing her grandmother’s legacy of service, Nicolle Verma personally served food to the needy patients and attendants. She said, “It is our good fortune to have received the joy of doing this noble work today through Foodman Vishal Singh. I have taken another step forward in carrying my family’s values and cooperation by joining hands with the Vijay Shree Foundation. My father taught me to serve and help the needy, and I feel happy when I bring a smile to someone’s face.”
On the birth anniversary of the late Veena Verma, the event organizer, Vijay Shree Foundation founder Foodman Vishal Singh, said, “We feel proud and happy that Dr. Abhishek Verma, a globally renowned business tycoon, has extended his support to uplift our country from the hunger index. Today, on his mother’s birth anniversary, he inaugurated a state-of-the-art permanent shelter at Lucknow Medical College, which will always be helpful for the needy attendants of patients. It is a pleasure for me and the organization to receive the affection of Mr. Verma.”
The event was attended by General Manager Verma Family Office Hemant Garg, Sonu Rajput, and the organization’s volunteers, including Sandeep Singh, Parmeshwar Ji, Prashant Rao Gautam, Balram Singh, Ramesh Chaudhary, Suman, Jeetu, Anil, Suraj, Vinay, Manish Bhadauria, Manas Mehrotra, Vivek, Apurv, Happy, and others.
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