Africa, Business, Politics

HSBC proposes to Nedbank as Old Mutual beams at the happy couple

By Andy Rice 23 August 2010

There are five parties in the potential marriage of HSBC and Nedbank; beside the couple itself, there are the parents (Old Mutual and the SA government), and the prize, which is the African continent. With everybody else liking the idea of a hook-up, it may fall to the government to be the disapproving father – or at least the stern father-in-law.

Confirming leaks on the weekend, Old Mutual on Monday morning said it had received a bid from HSBC for its stake in Nedbank. The international banking group may seek to buy as much as 70% of Nedbank; Old Mutual is expected to sell its entire 53% stake in a single transaction.

HSBC has agreed an exclusivity period while it conducts due diligence investigations of Nedbank, Old Mutual said. That locks out others believed to be interested in using Nedbank as a springboard into the African market, including Standard Chartered.

Such a deal is at the mercy of policymakers, given a distinct dearth of other objectors.

Old Mutual, for its part, has characterised a sale of Nedbank as good for both companies as well as South Africa in general, naming customers and employees among the potential beneficiaries of a big new shareholder with international experience and money to spend.

And Nedbank management has already expressed its happiness with HSBC as a potential controlling shareholder, which seems to leave nobody out in the cold.

The government may be less excited at the thought of allowing control of another bank to move offshore, with Absa already under the control of Barclays. A Nedbank acquisition would make two of the big four vassals to global groups with massive reach. Even though such a change would be cosmetic – for all its history, Old Mutual is effectively a British company these days – letting go proved hard in the Barclays case. Potential bidders, including HSBC, are understood to be spending at least as much time strategising their approach to regulators as they are their courtship of Old Mutual and Nedbank.

HSBC’s due diligence won’t be quick; with operations spread all over the continent, and exposure to complex instruments that have proven dangerous, the big bank won’t be cutting corners. That will give the government some time to make up its mind about the future structure of the local finance market, and about just how comfortable it is with globalisation.

By Phillip de Wet

Photo: HSBC Group Chairman Stephen Green attends a news conference to announce the lender’s 2010 interim results in Hong Kong August 2, 2010. HSBC’s half-year profit more than doubled from a year ago as bad debts fell sharply, and Europe’s biggest bank said it remained bullish on the outlook for emerging markets. REUTERS/Bobby Yip.

Gallery

Support DAILY MAVERICK & get FREE UBER vouchers every month

An increasingly rare commodity, quality independent journalism costs money, though not nearly as much as its absence can cost global community. No country can live and prosper without truth - that's why it matters.

Every Daily Maverick article and every Scorpio exposé is proof of our dedication to this unshakeable mission. Investing in our news media is by far the most effective investment into South Africa's future.

You can support Independent and Investigative journalism by joining Maverick Insider. If you contribute R150 or more per month you will receive R100 back in UBER vouchers. EVERY MONTH until October 2019.

So, if you'd like to help and do something meaningful for yourself and your country, then sign up to become a Maverick Insider. Together we can Defend Truth.


Moyane, Inc

Nugent Commission final report recommends criminal prosecution and far reaching changes to restore SARS

By Marianne Thamm

"I feel like we should stop calling feminists 'feminists' and just start calling people who aren't feminist 'sexist' – and then everyone else is just human." ~ Maisie Williams