Largest European Bank to Bid for Nedbank

July 9 - It has been reported in a number of media outlets that the largest bank in Europe, HSBC is eyeing an acquisition deal to purchase the South African Nedbank.

The price tag for this deal could earn stakeholders in Nedbank $4.4 billion.

Old Mutual insurer has the largest stake in Nedbank, which is considered the fourth largest lender in South Africa.

HSBC's investment bank, Lazard, has been appointed to advise management on a possible takeover, even though it has been confirmed that Old Mutual is not in negotiations with any particular buyers at this moment.

An analyst in London, Tony Silverman spoke about the effect that a potential sale could have on Old Mutual, which has been coming under pressure from its own stakeholders to review its structure.

"I think that selling Nedbank will be part of resolving Old Mutual's capital issues," he said. "It would be better if the buyer is not South African from Old Mutual's point of view, because the proceeds are more likely to remain outside South Africa."

However experts believe that South Africa's regulators may be the ones to stop such a deal, as they may not have the desire to bring another local bank under foreign control.

Two of South Africa's largest banks have large foreign ownership - Absa (British) and Standard Bank of which the Commercial Bank of China has a 20% stake.