Moody’s downgrades PNB, cites negative impact of fraud on capital
Moody’s has, however, reatained the outlook to the rating as stable, which reflects its expectation that the negative impact of the fraudulent transactions is largely known.business Updated: May 21, 2018 14:20 IST
Moody’s Investors Service has downgraded Punjab National Bank’s rating citing the impact of recent fraud on its capital as well as weak internal controls.
However, the outlook to the rating has been retained as stable which reflects Moody’s expectation that the negative impact of the fraudulent transactions is largely known.
The agency downgraded PNB’s foreign currency issuer rating by a notch to ‘ba1’, which is non-investment grade, from ‘Baa3’- meaning below investment grade.
“Moody’s Investors Service has downgraded the local and foreign currency deposit rating of Punjab National Bank (PNB) to Ba1/NP from Baa3/P-3. At the same time, Moody’s has downgraded the bank’s baseline credit assessment (BCA) and Adjusted BCA to ‘b1’ from ‘ba3’,” Moody’s said in a statement.
“The ratings reflect the negative impact of the discovery of a number of fraudulent transactions on the bank’s standalone profile, particularly its capital position. The rating downgrade also reflects the weak internal controls and processes of the bank, given that the fraudulent transactions were undetected for a number of years,” the statement said.
In February 2018, PNB disclosed it had discovered some fraudulent and unauthorised transactions amounting to Rs 11,390 crore ($1.7 billion). Based on the bank’s subsequent announcements, PNB’s total exposure to these transactions amounts to Rs 14,400 crore ($2.2 billion).
First Published: May 21, 2018 14:20 IST