Punjab National Bank and PNB Housing Finance enter new brand agreement

(PNB) and have entered into a fresh brand agreement, which gives PNB the right to withdraw its brand name from the mortgage lender.

PNB holds 33% in PNB Housing. The revised brand agreement raised doubts on whether a change in holding pattern is likely anytime soon.

The existing brand arrangement dated December 7, 2009 will continue to govern use of PNB trademark until PNB’s shareholding in the housing finance company is 30% or more. Upon PNB’s shareholding falling below 30%, the new agreement dated May 24 will replace the existing agreement, the housing finance company said in a regulatory filing.

“In the event PNB’s shareholding in mortgage lender falling below 20%, PNB would have the right to terminate the revised agreement. In case of such termination, PNB Housing shall be allowed a transition period of up to 24 months for change of brand name,” it said.

PNB, which was earlier planning to infuse Rs 600 crore in the mortgage lender, had to shelve the plan after failing to secure Reserve Bank of India‘s permission for it. So, any equity raising by PNB Housing Finance would dilute PNB’s shareholding in it.

The fresh agreement includes a royalty caluse as well. In the event of PNB’s shareholding falling below 30%, PNB housing will pay a royalty anything between Rs 15 crore and Rs 30 crore. The royalty would be 0.2% of its revenue or 2% of net profit, whichever is higher.


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