HSBC Eyeing Nedbank Acquisition

July 9 - Nedbank, considered South Africa's fourth largest lender and strong provider of home loans in the country, may be acquired by HSBC, Europe's largest bank.

Nedbank is majority-owned by Old Mutual insurer, which is hoping to solve some of its own capital issues with the potential $4.4 billion it could see from the acquisition.

"Old Mutual's strategy update in March I think made it very clear that banking was not part of their long term strategy, so it was a case of when, rather than if, they find a suitor," said a Johannesburg analyst.

However, while analysts believe that the sale would be good for Old Mutual, the South African financial regulators may veto the idea out of fear of another foreign owned bank in our midst.

"It would be better if the buyer is not South Africa from Old Mutual's point of view, because the proceeds are more likely to be able to remain outside South Africa," said one London based analyst.

Two of South Africa's banks already have foreign ownership.

The Commercial Bank of China has 20% ownership of Standard Bank, while Absa is majority owned by Barclays in Britain.

Analysts believe that the government would not be welcoming to the idea of a third bank with significant foreign ownership, wanting to keep the proceeds of a deal at home instead of it being taken out the country.

7/9/2010 9:09:13 AM