Nigeria’s biggest lender, Guarantee Trust Bank Plc, GTB, has been credited to be so flush with cash that it is planning to repay bonds worth $400 million which will be due in November 2018 instead of issuing additional debt.
Bloomberg in its latest Business report further revealed that the next two largest banks in the country “sold international bonds for the first time since 2014” while the smaller banks are faced with cash crunch leading to the scrap of plans to raise dollar loans therefore putting them in the struggle of sourcing investors to raise capital.
Bloomberg reported that “top-tier banks in Africa’s most-populous nation and biggest oil producer are rallying after the central bank in April opened a foreign-exchange trading window, easing a crippling currency shortage that contributed to the worst economic contraction in 25 years. Smaller banks are lagging behind as they battle rising levels of non-performing loans and capital buffers near regulatory minimums.”
Speaking on the widening gap between the top tier banks and the small lenders, an analyst at Afrinvest West Africa Ltd., Omotola Abimbola said:
“The gap between the Tier 1 and Tier 2 banks has been widening in profitability and balance-sheet size.
“In the next one or two years we will probably see the trend extending further.”
Bloomberg further reported that: “United Bank for Africa Plc, the third-biggest lender by market value, raised $500 million in its first Eurobond sale on June 1 at yields below initial guidance. This followed an equivalent issue a week earlier by Zenith Bank Plc in a deal that was four times oversubscribed. Guaranty Trust Bank Plc said this month it has no plans to sell Eurobonds because it’s setting aside funds to repay existing debt.