GTBank loses N35.55bn in failed securities investments in Ghana

Guaranty Trust Bank (GTBank), a subsidiary of Guaranty Trust Holding Company (GTCO) lost N35.55 billion in failed securities investments in Ghana for the financial period of 2022.

According to the company’s financial reports released in April, the investments were made through GTBank Nigeria and its subsidiaries, GTBank Sierra Leone, GTBank Liberia, and GTBank Rwanda.

In the breakdown of the investments in debt securities, GTBank had a total investment value of N34.71 billion in Treasury bills, but at the end of the year (2022), it lost N986.88 million, leaving the firm with N33.72 billion.

Its investment in Eurobonds suffered a loss of N14.05 billion, out of the N41.65 billion previously held. This leaves a balance of N27.59 billion.

Similarly, the Local USD bonds investment fell to N27.36 billion, as GTBank lost N4.16 billion out of the N31.52 billion exposed in the debt security.

Also, the N59.66 billion held in Local Cedis bonds dropped to N43.32 billion, indicating GTBank lost N16.34 billion.

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GTBank bore the brunt of the financial crisis in Ghana, where it invested heavily in debt securities. The country has found it difficult to meet its debt obligations over depleting foreign reserves, high yields on bonds and low revenue.

“On investment securities issued by the Government of Ghana, the Government of Ghana announced the suspension of payment on selected external debts due to its current financial crisis and launched a domestic debt exchange programme to address the economic challenges in Ghana. This event increased the level of credit risk that is associated with the securities issued by the Ghanaian Government,” GTBank said.

The domestic debt exchange programme “was the first step of the Country’s Debt Restructuring Exercise, which was a pre-condition for a US $3bn bail out, that the government had sought from the International Monetary Fund (IMF), due to its unsustainable debt levels (with public debt at over 100% of GDP, and debt service costs absorbing 70%-100% of revenues).” the firm stated.

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GTBank added: “Guaranty Trust Holding Company Plc is exposed to Ghana’s Sovereign Debt Restructuring, as a result of its investment in GTBank Ghana, which is a direct subsidiary of GTBank Nigeria Ltd (98% ownership).

“As a means of deploying US Dollar Liquidity, the Group also has exposures to Eurobonds issued by the Government of Ghana, through the following entities: GTBank Nigeria Limited, GTBank Sierra Leone, GTBank Liberia and GTBank Rwanda.

“The Government’s Effective Default on Debt Payments and Debt Restructuring Plan resulted in each of the Entities with exposures to the Ghanaian Government taking an Impairment Loss.”

Ghana’s decision to cut the investment value of investors was occasioned by the country’s agreement with the International Monetary Fund (IMF) to obtain a $3 billion loan to boost its foreign reserves and its capacity to meet debt obligations.