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PNB shares dive 14%, hit 52-week low as fraud gets murkier; loses Rs 8,000 crore in m-cap in 2 days

PNB shares crumbled 14% to hit a 52-week low after bank’s management detailed about the ongoing fraud in the state-run lender which is estimated to be Rs 11,400 crore. In a press conference held today afternoon, the top management of Punjab National Bank assured that the bank is trying it’s best to take action against the alleged offenders. PNB’s chief confirmed that Nirav Modi had written to the bank regarding the repayment plan. Following the announcement, the stock of Punjab National Bank fell as much as 13.88% to hit a fresh 52-week low of Rs 125.55 on BSE while the stock shed 14.12% to hit a 52-week low of Rs 125.25 on NSE.

The trading volumes in the shares of Punjab National Bank spiked to an exceptionally high level. At the closing on Thursday’s trades, more than 19.4 crore shares exchanged hands on the counters of both NSE and BSE with about 17.7 crore shares on NSE alone. The stock of Punjab National Bank got depreciated about 21.4% over the course of last two days on NSE. On Thursday, PNB shares lost about 12.89% to conclude at 127.05 on NSE while it settled 11.97% down at Rs 128.35 on BSE.

Following the two-day slide in the shares of Punjab National Bank, the bank has dropped Rs 8,091.34 crore from the market capitalisation. As per Thursday’s closing price of Rs 128.35, PNB held a market capitalisation of Rs 30,841.34 crore as against Rs 39,223.75 crore on Monday.

Billionaire diamond jeweller Nirav Modi’s firms – Diamond R US, Solar Exports, and Stellar Diamonds – have been accused of presenting a set of import documents to the branch, with a request to allow buyers’ credit for paying suppliers situated overseas and apparently conniving with two of the bank employees to access the credit based on the fake LoUs (Letters of Undertakings). “Nirav Modi has written to us on a repayment plan,” said Sunil Mehta, MD & CEO of Punjab National Bank.

“We detected the fraud in the third week of January this year and approached CBI on 29 January. Thereafter, an FIR was booked against the alleged culprits on 13 February,” PNB management added. Punjab National Bank was the first one to detect and report it to the government agencies and based on which raids are being country-wide raids had been conducted on whereabouts of culprits.

Reluctant to share many details about the ongoing investigation due to the amount of money involved in it and the sensitivity of the matter, PNB Chief, Sunil Mehta said that we are working on modalities and it’s too mature to comment on anything as investigation, hence we want to be careful. “We don’t want to affect liabilities of different stakeholders by speaking much on the issue at present. Please give us some breathing time to protect financial interests of banks and to do it successfully,” Sunil Mehta said further.

PNB’s filing on 14 February 2018

“The Bank has detected some fraudulent and unauthorised transactions (messages) in one of its branch in Mumbai for the benefit of a few select account holders with their apparent connivance. Based on these transactions other banks appear to have advanced money to these customers abroad. The quantum of such transactions is $1,771.69 million (approx). The matter is already referred to law enforcement agencies to examine and book the culprits as per law of the land,” Punjab National Bank said in an exchange filing

PNB’s filing on 5 February 2018

“The matter involving Rs 280.70 crores based on preliminary investigation report stands reported to appropriate Regulatory & Investigating Authorities, and the detailed investigation is on,” PNB said in a regulatory filing on 5 February 2018.

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