HSBC drops bid for Nedbank in South Africa
October 19, 2010
UK banking giant HSCB has ended talks with Old Mutual over a proposed buy out of South Africa’s fourth-largest bank, Nedbank.
According to the banking group, it has abandoned its plans to purchase the insurer’s South African arm. HSBC did not disclose the reason for dropping the bid.
Old Mutual stated that the bank’s withdrawal was not related to ‘adverse findings’ during financial investigations of Nedbank. However, the news has caused Nedbank and Old Mutual’s shares to drop on the market. Old Mutual shares were down by seven per cent and Johannesburg-based Nedbank fell nine per cent.
Last month, HSBC said that it had entered talks with Old Mutual to buy a majority stake in the South African banking group for 49.9bn rand (£4.4bn). The announcement that the bank would withdraw from talks comes just before a weekend deadline to complete the eight-week negotiations.
HSBC, Europe’s largest bank, simply stated that the negotiations for a possible acquisition were ‘not successfully concluded’, but it did say that it was still interested in entering the financial market in South Africa.
Analysts have called into question HSBC’s strategy for Africa, particularly since Nedbank could now be opened up for purchase by rivals like Standard Chartered.