By Dipo Olowookere
The rearrangement of the structure of Guaranty Trust Bank (GTBank) Plc into a financial holding company is making headway, Business Post can report.
On Wednesday, the company informed the investing public that it has obtained an approval-in-principle of the Central Bank of Nigeria (CBN) and a no-objection from the Securities and Exchange Commission (SEC) to restructure.
According to the notice signed by the scribe of GTBank, Erhi Obebeduo, after the exercise is completed, GTBank, which will now become the banking subsidiary of the new entity, will be delisted from the Nigerian Stock Exchange (NSE) and the London Stock Exchange (LSE), where shares of the firm are currently being traded.
On the local exchange, equities of GTBank were up on Thursday as at press time by 15 kobo or 0.47 per cent to N32.25 each.
It was explained that the banking arm of the holdco will be re-registered as a private limited liability company, though under the relevant provisions of the Nigerian law.
However, a deal will be struck with shareholders of GTBank for the exchange of the bank’s stocks for the stock of the new financial holding company at a court-ordered meeting to be fixed by a Federal High Court in Nigeria.
According to the disclosure, “under the restructuring, it is proposed that the issued shares in the bank be exchanged on a one-for-one basis for the shares in a financial holding company.
“The bank’s existing Global Depository Receipts (GDRs) are also proposed to be exchanged one a one-for-one basis for new GDRs to be issued by the financial holding company.”
GTBank explained that the holdco will have an “organisational structure similar to that used by a significant number of major financial institutions” in the world and will be “regulated by the CBN,” the banking watchdog in Nigeria.
The lender further explained that the new arrangement is expected to create more value for the company and the shareholders as the “the board of directors of GTBank made the decision to embark on the restructuring following a comprehensive strategic evaluation of the operating and competitive environment of the Nigerian banking sector in the near term.”
“The board expects that the financial holding company will have greater strategic flexibility to adapt to future business opportunities as well as market and regulatory changes than is currently the case,” it said.
Aduragbemi Omiyale
Please , clear this in a simple language. Does it mean a phase will operate as commercial bank while others or another as holding company? Is it going to be owned by individual or group? Does the change means that the bank is above its competitors or shortage of financial power to run this company? Is there hope to keep my customer relationship with them? Thanks so much sir
The bank will continue to operate very fine. The reason for the holdco structure is to allow the company to do other businesses like insurance, stockbroking and others. All these subsidiaries will only be under the new company. There is no cause for alarm.
Please what does this mean in a layman’s language.
Is there any thing to loose as an investor?
Thanks
There is nothing to lose but a lot to gain
If GTBank’s existing Global Depository Receipts are exchanged on a one-for-one basis for the new GDRs to be issued by the holding firm as anticipated, will there not be the issue of discrepancies in value, given that market forces aren’t allowed to dictate actual shares value?
In my personal opinion, I do not think so. What the company is trying to do is merely transfer of shares and if you look at it critically, shareholders will be getting the new shares at a dicounted rate if the reason for the new structure is achieved.