HSBC ditches plans to buy into African bank

Banking heavyweight HSBC has called off plans to buy a controlling stake in South Africa's fourth largest bank, handing an opportunity to rival Standard Chartered.

The group yesterday ended takeover talks understood to be worth some 5 billion with Old Mutual over its 70 per cent stake in Nedbank ahead of this weekend's deadline for the completion of a two-month period of exclusive discussions.

HSBC said negotiations had "not successfully concluded and have ended", although it stressed the group remained committed to growing its business in South Africa.

Old Mutual said HSBC had not made clear why it withdrew, but stressed it did not believe the decision related to any adverse findings during due diligence.

Nedbank is one of the largest financial groups in South Africa and has links with banks in 30 countries across the continent.

The end of talks leaves HSBC without a convincing Africa strategy and could hand Standard Chartered a chance to buy Nedbank, analysts said.

HSBC has a limited presence in Africa and had seen the deal as a launchpad to expand there, especially as trade between Africa and China increases. But since talks began, the London-based bank has announced a change in chairman and chief executive.

Johann Scholtz, banking analyst at Afrifocus Securities, said: "Nedbank would probably be their cheapest entry point into Africa and probably their least risky entry point."