Guaranty Trust Holdings plans to seek shareholder approval next month to raise up to $750 million in capital, joining other banks in bolstering capital reserves to meet new targets. The Central Bank of Nigeria last month announced minimum capital requirement for banks to strengthen the country’s financial system and enable banks to play a bigger role in boosting economic growth.
Guaranty Trust Holding Plc, which owns Guaranty Trust Bank, one of Nigeria’s top tier banks, said on Friday it would ask shareholders for permission to raise the funds at a meeting set for May 9. Access Holdings and FBN have announced capital raising plans in the last few weeks. More than 20 banks in Nigeria will need to raise extra capital within two years to meet the central bank’s new threshold.
The regulator has said lenders require extra buffers to support Nigeria’s economic growth ambitions, especially after two large devaluations in the Naira currency since June last year. Credit ratings agency Fitch said on Wednesday that it expected a marked increase in equity issuance by Nigerian banks over the next two years and also mergers as some mid-sized or small lenders could struggle to raise capital. Guaranty Trust Holding said it could issue shares or bonds in Nigeria or internationally to raise the funds. Shares of Guaranty Trust Holding fell 8.70% to 42 naira, underperforming the banking sector which traded flat early on Friday.
