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Report that Standard Chartered plans to buy Nedbank caused the SA bank's shares to surge

By unknown | Jul 20, 2007 | COMMENTS [ 0 ]

Marius Bosch

Marius Bosch

Shares in Nedbank, South Africa's fourth-biggest bank, surged over 6percent yesterday after a report that Britain's Standard Chartered is in talks to buy it.

Financial daily Business Day quoted unnamed sources saying Standard Chartered had been in discussions with Nedbank, which is majority owned by insurer Old Mutual Plc, for some time.

Both Nedbank and Standard Chartered declined to comment.

"We don't comment on market speculation," Nedbank spokesman Graham Lillie said. Old Mutual also declined to comment.

Business Day quoted Standard Chartered South Africa chief executive Christopher Low as saying South Africa was core to the group's strategy to expand its African business.

Nedbank shares jumped as much as 6,25percent to R144,50 while Standard Chartered stock declined 1,48percent to £16,59 in London. Old Mutual's London-listed stock rose 3,57percent to 174,5 pence.

Nedbank has a market capitalisation of about R66billion and is the smallest of South Africa's big four banks.

Nomura analyst Pedro Fonseca said Nedbank is the most likely target for any foreign bank looking to expand in South Africa.

"Nedbank has now recovered in terms of profitability and risen enough in value that Old Mutual, conceivably, is confident it can obtain an attractive price for an asset that its insurance business does not absolutely need to control," he said.

Nedbank launched a three-year recovery programme in 2004 to turn its business around after many problems, including wrong interest-rate calls, slashed profits and triggered a multibillion-rand cash call.

Since Britain's Barclays Plc bought a majority stake in South Africa's biggest retail bank Absa in 2005, there has been persistent market talk that another of the country's four big banks could be taken over by a foreign banking group. -Reuters


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