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…Investors Flee GTCO as Capital Shortfall and Dilution Fears Mount
Guaranty Trust Holdings Company (GTCO) is in freefall, shedding a staggering 27% of its market value in just one week. This dramatic plunge comes despite strong 2023 earnings, raising serious concerns about the company’s future.
GTCO has been downgraded from the top tier of the Nigerian Exchange, its market capitalization now languishing below N1 trillion. Analysts point to a potential capital shortfall as the culprit. The Central Bank of Nigeria’s (CBN) new requirements threaten to leave GTCO billions short, forcing a dilutive equity raise that could punish existing shareholders.
Adding fuel to the fire, GTCO’s rival, Zenith Bank, has seized the crown as the most valuable brand in the Nigerian financial sector.
GTCO Faces N362 Billion Gap to Meet International Banking Ambitions
The crux of the issue lies in GTCO’s N362 billion shortfall to meet the CBN’s capital base requirement for an international banking license. The bank’s current eligible capital sits precariously at N138.2 billion, far below the mandated N500 billion.
Shareholders Brace for Impact as Dividend Looms
Last week’s 19% share price plunge is just the beginning. Analysts predict a further markdown after GTCO pays out a N2.70 per share dividend on May 9th, 2024.
Is This a Buying Opportunity or a Sinking Ship?
While some analysts see the current price as a bargain, the uncertainty surrounding the capital raise and its impact on existing shareholders paints a concerning picture.
