PNB fraud case effect: Fitch places PNB's viability rating on Rating Watch Negative
Fitch Ratings placed Punjab National Bank's Viability Rating of 'bb' on Rating Watch Negative (RWN), following large fraud reported by PNB. Fitch will resolve Rating Watch once more clarity emerges on extent of control failures & 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-', stated Fitch agency.
In it's press release, Fitch stated that the recent fraud event has been a setback for the bank in its reputation and has had a capital market impact.
Meanwhile, shares of Punjab National Bank (PNB) extended losses for the fifth straight session on Tuesday, slipping nearly 5 per cent after the rating agency Fitch placed the public lender under negative watch.
The stock dipped as much as 4.63 per cent to hit its intraday low of Rs 111.50 on the BSE. The scrip has lost 31 per cent in the last five sessions.