The Board of Directors and management of Guaranty Trust Bank has disclosed that the Federal High Court of Nigeria on November 6, 2020, directed that a meeting of the holders of the fully paid ordinary shares of GTBank Plc, be convened on December 4, 2020 for the purpose of considering the transfer of the bank to a holding company.
This information was conveyed through a Notice of Court-Ordered Meeting by the bank, and published on the website of the NSE. It was signed by the bank’s secretary, Erhi Obebeduo, and the Nigerian legal counsel to the bank, Aluko & Oyebode.
According to the information contained in the disclosure, the court-ordered meeting of the holders of the fully paid ordinary shares of Guaranty Trust Bank Plc to be convened for the purpose of considering and if thought fit, approving, with or without modification, a Scheme of Arrangement pursuant to Section 715 of the Companies and Allied Matters Act, 2020 between the bank and the holders of the fully paid ordinary shares of 50 Kobo each in the bank.
The meeting will be held at the Oriental Hotel, 3, Lekki Road, Victoria Island, Lagos, Nigeria, at 10:00 a.m. or soon thereafter, at which place and time the Holders are requested to attend.
Resolutions to be proposed at the meeting
The following are some of the sub-joined resolutions that will be proposed, and if thought fit, passed as special resolution at the meeting:
- The Scheme of Arrangement dated November 4, 2020, a printed copy of which has been produced for the meeting and, signed by the Chairman be and is hereby approved.
- In accordance with the Scheme, the 29,431,179,224 ordinary shares of 50 Kobo each in the issued and paid-up share capital of the Bank held by the shareholders be and are hereby transferred to Guaranty Trust Holding Company Plc (the Holdco) in exchange for the allotment of 29,431,179,224 ordinary shares of 50 Kobo each in the share capital of the Holdco to the shareholders in the same proportion to their shareholding in the Bank credited as fully paid without any further act or deed.
- In accordance with the Scheme and pursuant to the prospectus issued by the Holdco, each existing holder of the Global Depositary Receipts issued by the Bank (the Existing GDRs) receive, as consideration for each existing GDR held, one new Global Depositary Receipt issued by JP Morgan Chase Bank N.A. (JP Morgan Chase), the Depositary Bank for the Holdco GDR programme (the Holdco GDRs).
- The Board of Directors of the Bank be and is hereby authorised to take all necessary actions to delist the shares of the Bank from the official list of The Nigerian Stock Exchange.
What you should know
Recall that Nairametrics reported earlier that Guaranty Trust Bank Plc had obtained an approval-in-principle from the Central bank of Nigeria (CBN) to operate as a financial holding company.
Under the restructuring, it is proposed that the issued shares of the bank will be exchanged on a one-for-one basis for the shares in a financial holding company. The bank’s existing Global Depositary Receipts (GDRs) are also proposed to be exchanged on a one-for-one basis for new GDRs to be issued by the financial holding company.
Subject to the approval of the Scheme by the Bank’s shareholders, the relevant regulatory authorities, and the Federal High Court of Nigeria, the holding company will have an organizational structure that is used by a significant number of major financial institutions globally.
However, commenting on the development in March was Segun Agbaje, the Chief Executive officer of GTB. He said that a holding company structure would enable the bank to keep up with the latest trends in the Nigerian financial services industry.
Despite CRR debits, Nigerian Banks record higher net interest income
Banks are recording higher net interest income, despite the CBN’s frequent CRR debits chalking off significant amounts of their cash.
Some of the top banks in Nigeria posted a total net interest income of N403 billion in the third quarter of 2020 compared to N369.5 billion in the same period in 2019.
In the first 9 months to date, the banks have reported a combined net interest income of N1.2 trillion compared to N1.1 trillion same period last year.
Nairametrics collated these figures from the following banks, FBNH, UBA, GT Bank, Access Bank, Zenith Bank, Fidelity Bank, Stanbic IBTC, Sterling Bank, and Union Bank. The banks recently released their third-quarter interim results.
Deposit money banks have complained bitterly over the central bank’s frequent CRR debits chalking off significant amounts of cash that they could have earned on.
A Nairametrics report indicates banks suffered CRR debits of over N1.9 trillion in the second quarter of 2020, taking the total amount of customer deposits held by the CBN at about N6.5 trillion.
The figure is likely higher now as more CRR debits have occurred in the third quarter of the year. Nairametrics reported banks were debited N226 billion CRR debit in a recent update provided by reliable sources.
However, as the above report indicates, the banks still earned more this year compared to 2020. Where banks may have suffered dips is in net interest margin, a measure of the percentage of income banks earn after netting off the cost of funds.
However, this has also been largely mitigated by low deposit rates even as banks maintain most of their lending rates.
Despite the rise in net interest income for the collection of banks under our review, some banks individually faired worse in 2020 compared to 2019. FBNH, Stanbic IBTC, and Access Bank all recorded lower net interest income in the first 9 months of 2020 compared to the same period in 2019. Significant gains over the prior year were however recorded with the other banks.
What is driving Margins
Banks are recording higher net interest income largely because interest rates on deposits are at near-record lows.
This drive down in the cost of funds helps boost the income of banks because they are also yet to significantly drop their lending rates.
In the first 9 months of the year, the banks reported total loans and advances of N1.6 trillion, 14% higher than the N1.4 trillion reported at the end of 2019.
Banks have also reported generally improved pre-tax earnings, posting a combined N737 billion in the first 9 months of 20120 compared to N723 billion in the same period last year.
The better than expected results has triggered a boost to their share price. Banks have also seen their share price rally in recent weeks as investors finally recognize their low valuations amidst strong earnings.
The Banking sector index is up 14.72% year to date and only fell last week after investors embarked on cashing out their profits.
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AXA Mansard Insurance Plc set to raise company’s share capital to N18 billion
AXA Mansard Insurance Plc. has announced its plans to embark on a share consolidation and issuance of bonus shares exercise.
AXA Mansard Insurance Plc. has announced its plans to embark on a share consolidation and issuance of bonus shares exercise required to take the company’s share capital to N18 billion.
This announcement is contained in a notice, signed by the firm’s Secretary, Mrs. Omowunmi Mabel Adewusi and sent to the Nigerian Stock Exchange market, as seen by Nairametrics.
What you should know
The corporate decision is part of the resolutions of the Board of Directors of AXA Mansard Insurance Plc. subject to shareholders’ approval and other regulatory requirements.
Some key highlights of the notice are:
- That the Management of the Company is set to carry out the share consolidation and issuance of bonus shares exercise required to take the Company’s share capital to N18billion.
- That the bonus issue exercise may be done at once or in phases, provided the Company meets the September 30, 2021 deadline set by the Commission.
- That subject to regulatory approvals, the Company would hold an Extra Ordinary General Meeting to obtain shareholders’ approval of the Share consolidation and Bonus Share
- That the Board and Management be and are hereby authorized to appoint such advisers, professionals, and parties that they deem necessary, upon such terms and conditions that the Directors may deem appropriate with regard to the aforementioned Share Consolidation and Bonus Issue Exercise.
- That the Board of Directors be and are hereby authorized to take all steps and do all acts that they deem necessary for the successful implementation of the above stated resolutions.
Why it matters
The corporate action is a deliberate and strategic way of meeting up with the new and revised minimum paid up share capital requirements for composite firms, which is currently pegged at N18 billion.
CRR Compliance: Banks suffer another N226 billion in CRR debits
Nigeria banks have had their vaults debited of N226 billion by the Central Bank of Nigeria in the apex bank’s latest CRR sequesters.
Deposit Money Banks (DMBs) have collectively suffered a debit of N226 billion in compliance with the Cash Reserve Requirements (CRR) fixed by the CBN.
According to a reliable source, the debit occurred in the week ended November 20, 2020. This follows a whopping N917.5 billion debit recorded a month ago as reported by Nairametrics. The central bank imposed CRR sequesters on banks that fail to meet its minimum lending targets as a percentage of deposits.
In its September monetary policy communique, the bank claimed its policy measures have led to increased lending in the economy emphasizing the need to double down on it.
“The Differentiated Cash Reserves Requirement (DCRR) and the minimum Loan-to-Deposit Ratio (LDR), have ensured a significant stream of credit to the real economy. As at end-August 2020, aggregate bank credit had risen by about N3.7 trillion relative to its level in May 2019, when the LDR policy was introduced. The outlook for credit to the economy remains positive given that these policies are still in place and, importantly, that the banking industry continues to be resilient.”
What you should know
- Out of the N226 billion debited for November 2020; top five (5) banks in Nigeria – FUGAZ, bore the biggest brunt, with a combined debit of N137.5 billion, implying that the top 5 banks accounted for 60.8% of the total debit for this month.
- The break down of the debit for the top five banks are; GT Bank (N59.5 billion), Zenith Bank (N30 billion), FBN (N20 billion), Access (N18 billion), and UBA (N10 billion).
- Nairametrics had earlier reported that CBN increased the CRR in January by 5% to 27.5% to address monetary-induced inflation, whilst retaining the benefits from the CBN’s LDR policy.
- Cash Reserve Ratio (CRR) is a specified minimum fraction of the total deposits of customers, which commercial banks have to hold as reserves either in cash or as deposits with the central bank. CRR is set according to the guidelines of the central bank of a country.
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