GTBank is Set to Raise $750 Million to Meet New CBN's Capital Requirement

Guaranty Trust Holding Company Plc, the parent company of GTBank, is seeking shareholders’ approval to raise $750m (N922.5bn at N1230/$) capital to meet the new capital requirement set by the Central Bank of Nigeria.

This initiative aligns with the efforts of other banks to bolster capital reserves to meet new regulatory targets.

The Central Bank of Nigeria last month announced minimum capital requirements for banks to strengthen the country’s financial system and enable lenders to play a bigger role in boosting economic growth.

GTBank Follows CBN New Guidelines

CBN announced new guidelines on its recapitalization policy for banks in the country. In a statement signed by its acting Director of Corporate Communications, Sidi Ali, the CBN directed commercial banks with international authorization to increase their capital base to ₦500bn and national banks to ₦200bn.

According to the acting CBN director, commercial banks with national licenses, like Guaranty Trust Bank Holdings, must meet an N200bn threshold, while those with regional authorization are expected to achieve an N50bn capital floor.

Similarly, non-interest banks with national and regional authorizations will need to increase their capital base to N20bn and N10bn, respectively.

Based on the CBN circular on recapitalization, only the share capital and premium capital of the shareholders’ fund portion of the balance sheet will be recognized.

CBN Guidelines For GTBank and Others

The circular read: For existing banks

(a) The minimum capital specified above shall comprise paid-up capital and share premium only. For the avoidance of doubt, the new capital requirement shall NOT be based on shareholders’ funds.

(b) Additional Tier 1 capital shall not be eligible for meeting the new requirement.

(c) All banks are required to meet the minimum capital requirement within 24 months commencing from April 1, 2024, and terminating on March 31, 2026.

(d) Notwithstanding the capital increase, banks are to ensure strict compliance with the minimum capital adequacy ratio requirement applicable to their license authorization.

(e) In line with extant regulations, banks that breach the CAR requirement shall be required to inject fresh capital to regularise their position.

Conclusion

According to the whistler, GTCO said, “The Company be and is hereby authorized to raise additional capital of up to $750,000,000.00 (seven hundred and fifty Million United States Dollars only), (or its equivalent in Nigerian Naira), through the issuance of securities comprising ordinary shares, preference shares, convertible and/or non-convertible notes, bonds or any other instruments, in the Nigerian and/or international capital markets, either as a standalone issue(s) or by the establishment of capital raising program (s), whether by way of public offerings, private placements, rights issues, and/or other transaction modes, at price(s), coupon or interest rates determined through book building or any other acceptable valuation method or combination of methods, in such tranches, series or proportions, within such maturity periods and at such dates and upon such terms and conditions as may be determined by the board of directors of the Company (the Board), subject to obtaining the requisite approvals of the relevant regulatory authorities.”

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