GTBank receives in-principle approval to restructure to a holding company

Guaranty Trust Bank (GTBank), one of Nigeria’s largest banks, said on Wednesday that it has obtained in-principle approval from the Central Bank of Nigeria (CBN) to commence a process of restructuring the bank into a financial holding company (holdco).

Under the proposed arrangement, GTBank will be delisted from the Nigerian Stock Exchange (NSE) and the London Stock Exchange (LSE) and re-registered as a private limited liability company under the relevant Nigerian corporate laws, according to a disclosure sent to the NSE by the bank. The holdco will then be listed on the NSE and the LSE.

Following the restructuring, GTBank's shares will be exchanged on a one-for-one basis for the shares in the holdco. The bank’s existing Global Depositary Receipts (GDRs) will also be exchanged on a one-for-one basis for new GDRs to be issued by the holdco.

GTBank said its board of directors made the decision to embark on the restructuring after a strategic evaluation of the near-term operating and competitive environment in Nigeria’s banking sector. The bank expects to have greater flexibility to adapt to future business opportunities as a financial holdco. According to the bank, the holdco will have an organisational structure similar to that of major financial institutions globally.

Last month, Fitch Ratings affirmed GTBank's 'B' long-term issuer default rating (IDR), with a stable outlook. The ratings agency said its decision was based on the bank's sufficient headroom to absorb moderate shocks from sustained downside risks to the operating environment. Fitch also said the national rating of 'AA(nga)' for GTBank is higher than that of most Nigerian banks due to the bank's franchise strength, performance track record and solid capitalisation.

GTBank's 2020 half-year financial results released in September showed a 5.2 per cent decrease in profit before tax to N109.7 billion at the end of June 2020, compared to N115.8 billion recorded in the corresponding period of 2019. The bank grew its loan book by 8.1 per cent to N1.6 trillion and closed the half-year period with total assets of N4.5 trillion.

The restructuring is subject to the approval of the bank's shareholders, regulatory authorities and the Federal High Court of Nigeria. The reorganisation of GTBank comes after Access Bank Plc and Sterling Bank Plc recently announced their intentions to restructure into holdcos.

The bank has subsidiaries in other nine African countries, including Ghana, Liberia, and Kenya, as well as the United Kingdom.