HSBC eyes controlling interest in Nedbank
By Robert Barr |
August 24, 2010, Tuesday
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Print Edition
Print Edition
BRITISH bank HSBC Holdings Plc said yesterday it is in talks with financial group Old Mutual Plc to buy a controlling stake in Nedbank Group Ltd of South Africa in a deal worth as much as US$6.8 billion.
Old Mutual said the discussions center on the sale of a 70 percent stake in Nedbank, South Africa's fourth-largest banking group in terms of total assets.
Old Mutual said the proposed sale, if agreed and approved by regulators and shareholders, would be a major step in its strategy to simplify its business. Proceeds would be used to reduce debt and make new investments in South Africa.
The sale "is likely to result in a material strengthening of South Africa's financial sector, foreign direct investment by HSBC in the banking sector and material incremental investment by Old Mutual in the long-term savings sector," Old Mutual said in an announcement to the London Stock Exchange.
Ian Gordon, analyst at Exane BNP Paribas, said regulatory clearance of such a deal is not certain although South Africa has no rules prohibiting foreign companies from acquiring a stake of this size.
"Barclays was limited to 53.96 percent of ABSA in 1985, ICBC acquired only 20 percent of Standard Bank in 2007, and recent indications have suggested limited appetite to permit further majority acquisitions by International banks," Gordon said. "So this is not yet a done deal."
Bruce Packard, analyst at Seymour Pierce, agreed that regulatory clearance may be difficult, but he said the acquisition would be positive for HSBC. He noted that HSBC now has about US$43 billion of excess capital relative to the lower end of its Tier 1 capital target of 7.5 percent to 10 percent.
According to a statement from Nedbank, HSBC would be "an attractive international banking partner."
Old Mutual said the discussions center on the sale of a 70 percent stake in Nedbank, South Africa's fourth-largest banking group in terms of total assets.
Old Mutual said the proposed sale, if agreed and approved by regulators and shareholders, would be a major step in its strategy to simplify its business. Proceeds would be used to reduce debt and make new investments in South Africa.
The sale "is likely to result in a material strengthening of South Africa's financial sector, foreign direct investment by HSBC in the banking sector and material incremental investment by Old Mutual in the long-term savings sector," Old Mutual said in an announcement to the London Stock Exchange.
Ian Gordon, analyst at Exane BNP Paribas, said regulatory clearance of such a deal is not certain although South Africa has no rules prohibiting foreign companies from acquiring a stake of this size.
"Barclays was limited to 53.96 percent of ABSA in 1985, ICBC acquired only 20 percent of Standard Bank in 2007, and recent indications have suggested limited appetite to permit further majority acquisitions by International banks," Gordon said. "So this is not yet a done deal."
Bruce Packard, analyst at Seymour Pierce, agreed that regulatory clearance may be difficult, but he said the acquisition would be positive for HSBC. He noted that HSBC now has about US$43 billion of excess capital relative to the lower end of its Tier 1 capital target of 7.5 percent to 10 percent.
According to a statement from Nedbank, HSBC would be "an attractive international banking partner."
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