GTBank delisted from Nigeria Stock Exchange
By Okwo Romeon
Trading in Guaranty Trust Bank shares was suspended last week Friday in preparation for the delisting of the bank and subsequent listing of the new its new Holding Company (Holdco).
According to the banks management, GTBank is adjusting its operating model and service offerings to remain relevant in the financial services sector and to position the bank for sustainable long-term growth given the increasing evolution of businesses across the globe.
The new GTB Holdco structure will consist of the banking subsidiaries and the non-banking subsidiaries,the banking subsidiaries will include GTBank (Nigeria, West Africa & East Africa) and GTBank UK while the non-banking subsidiaries will be a payment company, an asset management comp any, and a pension business.
Based on information from previous conference calls of the bank,GTBank plans to leverage on its existing fintech business rating while keeping to it standard.
The banks management described the new payment business
they plan to unveil would be known as Ali Pay. GTPay is a secure internet payment gateway developed to facilitate payments online using debit cards issued by banks on the Interswitch Network.
In terms of USSD transaction counts, the banks management noted at the FY 2020 conference call that GTbank accounts for about 18% of the NIBSS Instant Payments (NIP) outflows and about 16-17% on the inflow side. USSD is growing at about 37%, though expected to slow down as it gradually becomes more expensive. The Managing Director noted that there will be no transfer pricing as any business the fintech does will be in addition to what the bank is currently doing.
There would be also a merchant acquiring side, and the payment business will work with the bank to develop a mobile wallet strategy which will be taken to other three African countries, probably Ghana, Cote dIvoire, and Kenya to drive scale.
IN Pension Fund Administrator (PFA)
The management of the bank noted that a small existing business in the PFA segment will be acquired and grown organically while in Asset Management,the bank also plans to acquire an asset management business which many believe will be Investment One, a former subsidiary of the bank before the divestment of its non-banking subsidiaries to become a full commercial bank.
The banks hope the current board will be dissolved, and new boards reconstituted for both the Holdco and the bank. There will be a s even-member board at the Holdco level and an eight-member board at the bank level.
Under the terms of the new scheme and subject to the conditions, the scheme shareholders will receive the same number of Holdco shares in exchange for their current GTBank Shares. On the effective date, each shareholder of GTBank will receive one share of the Holdco shares for every GTBank shares held within five business days of the effective date,the bank clarified.
The Bank Overview
GTBank stands to benefit from the decision to operate as a holding company as this gives the bank opportunity to diversify its revenues away from the increasingly competitive commercial banking landscape. Oper ating the payment business as a separate company will also better position the bank to deal with competition from fintechs and the growing payment ecosystem. We also believe the bank already has an effective payment system base to take off.
Provided acquisition cost is not exorbitant, we believe the bank can leverage its broad customer base to grow its pension business organically. More importantly, the new structure helps to preserve the senior management team (particularly the Managing Director of the bank who becomes the Managing Director of the Holding Company) who have been responsible for the success of the bank over the years.
Revenue
The bank expect some new revenue sources such as revenue from the PFA and asset management businesses. We also expect increased revenue from the payment business as this grows but we note that most of the initial revenue from that business segment already gets reported under the bank revenue.
GTBank is Nigeria leading Commercial banking with spread across Africa and some European countries.