Explained: GTCO’s ₦10 Billion Capital Raise and the Rule Behind It

Brief Summary:

GTCO raised ₦10 billion through a private placement to comply with a special Central Bank rule that applies only to financial holding companies, not regular banks.

The capital raise was necessary because GTCO’s subsidiaries—especially Guaranty Trust Bank—have grown and increased their regulatory capital, forcing the holding company to strengthen its own capital base.

CBN rules require a holding company’s paid-up share capital to be at least equal to the combined regulatory capital of all its regulated subsidiaries, to ensure group-wide financial stability.

The private placement closed at the end of December 2025 after approvals from the CBN and SEC, with the disclosure timing driven by regulatory and stock exchange reporting rules.

Guaranty Trust Holding Company Plc (GTCO) raised ₦10 billion through a private placement to satisfy a capital rule that applies specifically to financial holding companies. The company disclosed on December 30, 2025, that it had secured regulatory approvals from the Central Bank of Nigeria (CBN) and the Securities and Exchange Commission (SEC) to raise the investment.

The offer, which closed on December 31, 2025, involved the issuance of 125 million ordinary shares at ₦80 per share. CBN Guidelines for Licensing and Regulation of Financial Holding Companies mandate that a HoldCo must maintain minimum paid-up share capital that is at least equal to the combined regulatory capital of its regulated subsidiaries.

In this sense, GTCO is a financial holding company (HoldCo) with several regulated subsidiaries (like its banking subsidiary, Guaranty Trust Bank Limited, and its pension, payments, and asset-management arms). In simple terms: HoldCo paid-up share capital ≥ Aggregate regulatory capital of subsidiaries. Notably, GTCO’s banking subsidiary, Guaranty Trust Bank (GTB) Ltd., has grown and increased its regulatory capital, surpassing the CBN’s minimum requirement for internationally authorized banks.

So, the holding company’s own capital base needed to rise in line with this growth. If the HoldCo doesn’t raise fresh capital, it can fall out of compliance with that requirement. In addition to that, GTCO had injected significant capital into its main banking subsidiary, raising GTBank’s paid-up share capital to ₦507.58 billion. As of September 30, 2025, however, the holding company’s own share capital stood at ₦18.21 billion, with a share premium of ₦489.37 billion, bringing its total equity from issued shares to the same ₦507.58 billion level.

Against this backdrop, the ₦10 billion private placement is aimed at ensuring that GTCO’s paid-up share capital remains aligned with the growth and capitalization of its subsidiaries in line with regulatory requirements. The raise was carried out towards the end of 2025 and only recently disclosed publicly in a statement issued by GTCO’s Group General Counsel and Company Secretary, Erhi Obebeduo.

The HoldCo needed final approvals from both the CBN and the SEC before the placement could proceed and be publicly reported. In most cases, announcements are often made once all preconditions are satisfied and after the transaction has formally closed or is near closing, to meet up with timing compliance. The company also operates under disclosure standards for listed entities (NGX and LSE), which dictate when such material corporate actions must be communicated. Therefore, although the placement was closed on December 31, 2025, the official announcement only came on December 30, 2025.

The HoldCo Rules

The HoldCo rule, in accordance with Section 7.1 of the CBN’s Guidelines for Licensing and Regulation of Financial Holding Companies (FHCs) in Nigeria, states that a financial holding company must maintain paid-up share capital at least equal to the aggregate regulatory capital of all its regulated subsidiaries. This means HoldCo paid-up share capital must be greater than (or equal to) the aggregate regulatory capital of subsidiaries.

The rule is designed to achieve multiple objectives, and that's why the apex bank enforces the rule. The rule ensures that the holding company has sufficient capital strength to support its subsidiaries when required, preventing the same capital from being counted more than once across the group and avoiding a structure in which the parent company functions merely as a thin pass-through entity sitting above well-capitalized operating businesses.

However, it's important to note that this rule applies only to financial holding companies like GTCO, not to standalone commercial banks like GTB, FCMB, or UBA or non-financial firms, and this is why this type of investment might look unusual to some observers. In addition to that, regulated subsidiaries expand through recapitalization exercises, higher regulatory capital thresholds, retained earnings, or the introduction of new regulated businesses.

Any of these expansion strategies makes the total regulatory capital within the group naturally increases. The holding company, however, does not automatically share in this growth, as it can only increase its capital base through new equity injections, and this actually makes periodic capital raises necessary to keep the parent company in line with the expanding scale and regulatory footprint of its subsidiaries.