HSBC revealed yesterday that it is in “exclusive” talks with insurer Old Mutual on the purchase of a majority stake in South Africa’s Nedbank, as the lender seeks to expand further into emerging markets.
“HSBC Holdings plc has entered into exclusive discussions with Old Mutual plc about the possible acquisition of a majority stake in Nedbank Group Ltd, South Africa’s fourth largest banking group by total assets,” HSBC said in a brief statement to the London Stock Exchange.
“The discussions are ongoing and if successfully concluded would be conditional on, among other matters, obtaining the necessary regulatory approvals,” added the Asia-focused bank.
In a separate statement, Old Mutual revealed that it has received a proposal from HSBC to buy up to 70 per cent of Nedbank shares, but did not reveal the price.
Old Mutual added that the proposed deal would be a “major step” in its strategy to reduce the group’s complexity, adding that the proceeds would be reinvested and used to cut debt.
The deal has not yet been sealed, but HSBC is keen to expand in Africa as part of its ongoing strategy to seek growth in emerging markets, according to a source familiar with the bank’s thinking.
“It’s important to remember that this isn’t yet a done deal. HSBC has entered exclusivity – nothing more,” the source told AFP.
“HSBC has long talked about the need for a bigger presence in Africa. Securing exclusivity shows its commitment to finding a way of developing its business there.”
The source added: “It’s further evidence that HSBC management are repositioning the busi-ness and exploring opportunities to invest in faster-growing markets.”
“HSBC has confidence in the long-term economic and social development of Africa.”
Meanwhile yesterday, the Financial Times newspaper reported that HSBC had fended off competition for Nedbank from British-based emerging markets lender Standard Chartered.
The daily business newspaper, which cited people familiar with the talks, added that HSBC’s proposed Nedbank deal could lead to a full takeover offer. HSBC had agreed last month to buy the Indian commercial and retail banking assets of Britain’s state-controlled Royal Bank of Scotland.