Directors of Guaranty Trust Bank Plc, at the weekend, unveiled the scheme document to inform holders of its ordinary shares and Global Depository Receipt (GDR) of plans to transform into a holding company structure under the name Guaranty Trust Holding Company Plc.
The scheme proposes that the shares be transferred to the Holdco in consideration for the said transfer, with the shareholders receiving a total of 29,431,179,224 ordinary shares of 50 Kobo each in the Holdco. This will be credited as fully paid, in exchange for a total of 29,431,179,224 ordinary shares of 50 Kobo each in GTBank held by the Scheme Shareholders as at the Terminal Date, which will be transferred to Holdco on the effective date.
To give effect to the scheme, shareholders of the bank will hold a virtual court-ordered meeting on December 4, 2020 in Lagos, to approve the scheme of arrangement and thereafter report the outcome of the meeting to the Central Bank of Nigeria (CBN) and the Securities & Exchange Commission (SEC). The process will culminate trading cessation in its shares on the Nigerian Stock Exchange (NSE) on December 30, 2020, the date the bourse is expected to approve the delisting of GTBank’s shares.
The Holdco shares will then be listed on January 5, followed by the GDRs on the following day, barring any last minute change.
In a letter to the shareholders, the bank’s chairman, Mrs. Osaretin Demuren, explained that the board believes the planned restructuring “the most appropriate approach to create greater strategic flexibility and diversification of the Group’s revenues.”
The planned restructuring, she continued, “will result in shareholders holding the holdco in same proportion as their current holdings in the Bank and the Bank being held wholly by Holdco, which will be a regulated entity for CBN’s purposes. The Bank will continue to be subject to the full suite of CBN banking regulations and, in all other material respects.
The scheme document based the decision to transmute into Guaranty Trust Holdco Plc on the CBN’s Regulation on the Scope of Banking Activities & Ancillary Matters, No. 3, of September 2010, which became effective November 15, that year.
“The purpose of this action was to promote a sound financial system in Nigeria by limiting the exposure of banks to higher operating risks and reducing the propensity to put depositors’ funds into risky, non-banking businesses.”
It stipulates the type of banks permitted to carry on business in Nigeria such as Commercial Banks; Merchant Banks; and Specialised Banks which include non-interest banks, microfinance banks, development banks and mortgage banks.
The guideline repealed the Universal Banking Guidelines issued during the years of Prof. Chukwuma Soludo as CBN Governor.
Continuing, Mrs. Demuren noted further that “in view of the evolution of businesses and sectors/industries across the globe driven by rapid advancements in technology, it has become imperative for GTBank to adjust its operating model and service offerings, in order to remain relevant in the financial services landscape of the future and position the group for sustainable long-term growth.”
The proposed restructuring, the directors believe, offers “greater strategic flexibility and opportunity for diversification of the Group’s revenues; better positioning to deal with emerging competition, for example, fintechs and payment service banks; (and) more focused regulatory oversight of the various arms of the Group.”
Furthermore, the structure will birth a “more efficient management structure with the Holdco having the responsibility of assessing strategic initiatives for the overall benefit of the Group; preservation of senior management team, culture and business model; and preservation of shareholder value.”
The restructuring will also earn dividend from GTBank which will not “form part of the Holdco’s taxable income,” in line with the Finance Act, 2019, which introduced significant changes to the companies’ income tax regime in Nigeria, citing an impact assessment carried out by Andersen Tax LP to assist in the evaluation of the potential tax implications.
The banking subsidiaries will remain subject to the oversight of the respective prudential regulatory authorities in their jurisdictions, while the group’s firm-wide risk management framework will continue to apply across the entire restructured group.