NGX Lists 29.431bn Shares Of GT HoldCo

One week after placing Guaranty Trust Bank Plc on full suspension, on Friday, June 18, 2021, the Nigerian Exchange Limited, on Thursday, June 24, 2021, delisted the entire 29,431,179,224 issued shares of Guaranty Trust Bank Plc.

In its place, the exchange listed the entire 29,431,179,224 issued share capital of Guaranty Trust Holding Company Plc on its Daily Official List at N28.55 per share.

This, the NGX explained in notice to stakeholders, “is pursuant to the Scheme of Arrangement between Guaranty Trust Bank Plc and the holders of its fully paid ordinary shares of 50 Kobo each as approved by the Securities and Exchange Commission and sanctioned by the court.”

The new Guaranty Trust Holding company structure will comprise the banking subsidiaries- GTBank (Nigeria, West Africa and East Africa) and GTBank UK, while the non-banking subsidiaries will include an asset management company, its pension business and a payment services company.

The group, therefore, joins the league of competitors that have also sought and received regulatory nod to adopt the Holdco structure “diversifying away from commercial banking into holding company structure given the challenging macro and regulatory environment,” according to analysts at Arthur Stevens Asset Management Company, an investment banking group. They are: Stanbic IBTC, FBN Holdings, and FCMB Group, as well as Sterling, and Access

Arthur Stevens analysts expressed the popular belief that GT HoldCo could reacquire Investment One, its former asset management subsidiary then known as GT Asset Management during the universal banking era, even as nothing has been said about the insurance segment where its former subsidiary-  GT Assur is today’s AXA Mansard Insurance.

Take off of the new structure was initially planned by management for Q1 2021, but it suffered a setback due to the COVID-19 pandemic.

Segun Agbaje, GMD/CEO

Recall that shareholders of the bank held a virtual court-ordered meeting on December 4, 2020, in Lagos, to approve the scheme of the arrangement, after which the management thereafter reported the outcome of the meeting to the Central Bank of Nigeria (CBN) and the Securities & Exchange Commission (SEC).

The process was supposed to culminate in cessation of trading in its shares on the Nigerian Exchange (NGX) on December 30, 2020, the date the bourse ought to approve the delisting of GTBank’s shares.

The Holdco shares were 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, had expressed the board’s belief that the planned restructuring is “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 had 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.”

Mrs. Demuren

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 was expected also to 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.

On the impact of the new structure on its earnings, Arthur Stevens expects “costs associated with the restructuring process to increase Opex though management stated that these will be minimal.

“Such costs include one-off costs such as legal and regulatory fees, professional advisory fees, acquisition costs and some fixed costs. There would also be some ongoing costs associated with running the Holdco.

“We expect increased revenue from the payment business and also expect new revenue sources from the asset management and PFA business, hence we expect an overall improvement in the revenue of the Holdco as against revenue flow from the previous structure,” the analysts added.

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