HSBC in talks on SA bank deal

HSBC is in talks with financial group Old Mutual to buy a 70 per cent stake in Nedbank, South Africa's fourth-largest bank, in a deal worth as much as $6.8 billion.

Old Mutual said the discussions centre on the sale of a 70 per cent stake in Nedbank. Shares in Old Mutual closed up 3.9p at 124.9p while HSBC shares rose 5p at 639.2p.

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.

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 per cent of ABSA in 1985, (Chinese bank] ICBC acquired only 20 per cent 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."