Union Bank claims $300 million exposure to LoUs issued by PNB

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Mumbai: Union Bank of India clarified on Friday that its foreign branches had taken exposure against multiple letters of undertaking (LoUs) issued by Punjab National Bank (PNB) on behalf of Nirav Modi. In a communication to the stock exchanges, the bank said its outstanding exposure against these LoUs stood at $300 million.

“The outstanding exposure related to the incident is approximately $300 Million and the bank is fully secured by LoU/LC/Other Documents and fully confident to receive the payment,” said the notice.

Union Bank also said that its foreign branches had taken these exposure with PNB as counter-party risk through authenticated SWIFT messages. SWIFT stands for The Society for Worldwide Interbank Financial Telecommunication. The bank also added that it had purchased buyers’ credit from Axis Bank through “Risk Participation”as part of normal international business practice.

State-owned PNB on Wednesday said it has detected a Rs11,400-crore financial fraud where billionaire Nirav Modi and his related companies acquired LoUs from a Mumbai branch to obtain overseas credit from other Indian lenders. In its complaint to the CBI on 29 January PNB had said that it had issued LoUs to Hong Kong branches of Allahabad Bank and Axis Bank.

Private sector lender Axis Bank clarified on Wednesday that it has sold down all the transactions which were undertaken against LoUs by PNB.

At 10.15am, Union Bank shares fell 1.75% to Rs118 on BSE.livemint