HSBC Holdings may bid for South Africa's Nedbank, a potential R33,4billion deal that would give Europe's largest bank a bigger profile in Africa, Sky News has reported.
Buying a majority stake of South Africa's fourth-largest lender would bulk up HSBC's presence in Africa's top economy and give it a wider platform for expansion.
Old Mutual, the Anglo-South African insurer that has a majority stake in Nedbank, has been under pressure from some investors to review its sprawling structure.
While Old Mutual is not in talks with potential buyers now, HSBC has appointed investment bank Lazard to advise on the possible takeover, Sky said.
But a potential deal could face resistance from South African regulators, who may be wary of another bank falling under foreign control and would want to keep proceeds from a deal at home.
Officials for HSBC, Nedbank, Lazard and Old Mutual all declined to comment.
"I think that selling Nedbank will be part of resolving (Old Mutual's) capital issues," said Tony Silverman, an analyst at S&P Equity Research in London.
"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 be able to remain outside South Africa.
"Old Mutual's strategy update in March 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 one Johannesburg-based analyst.
Two of South Africa's biggest banks already have significant foreign ownership and analysts have said the government may not be keen to allow a third.
Absa is majority-owned by Britain's Barclays, while Standard Bank is 20percent owned by the Industrial and Commercial Bank of China.
South Africa's foreign-exchange controls may also prevent Old Mutual from taking proceeds abroad.
For Nedbank, a tie-up with HSBC would allow it to bolster an investment banking business that is weaker than that of its rivals.
"If you want to grow in Africa, given that most of the deals are infrastructure and commodity-type deals, you want somebody with an investment banking platform," the analyst said.
Old Mutual owned about 52,2percent of Nedbank as of the end of December, down from 54percent a year earlier. - Reuters