HSBC in talks to buy Nedbank majority stake

HSBC on Monday revealed that it is in "exclusive" talks with insurer Old Mutual over the purchase of a majority stake in South Africa's Nedbank, as the lender seeks to expand further into emerging markets.

The announcement comes amid a recent flurry of merger and acquisitions activity that has helped spur the British stock market higher during the normally quiet month of August.

"HSBC Holdings has entered into exclusive discussions with Old Mutual about the possible acquisition of a majority stake in Nedbank Group, South Africa's fourth largest banking group by total assets," Europe's biggest bank 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 Asia-focused HSBC.

Old Mutual revealed in a separate statement 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 owns 51.6 per cent of Nedbank.

London-listed Old Mutual said that the proposed deal would be a "major step" in its strategy to streamline the group, adding that the proceeds would be reinvested and used to cut debt.

In Johannesburg, Nedbank issued a statement which welcomed HSBC as an "attractive international banking partner" that would enhance its business.

"Nedbank Group's initial assessment of the proposed transaction is that HSBC represents an attractive international banking partner and shareholder of reference and has the potential to provide Nedbank Group with benefits which should enhance Nedbank Group's ability to strengthen its position in the South African banking sector," it said.

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 HSBC's thinking.

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.

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