'Nedbank not for sale'

"Nedbank is not for sale," Chief Executive Jim Sutcliffe told reporters during a conference call from London.

Sutcliffe said he wanted to disabuse the notion that the UK financial services company is turning its back on the country to which it traces its roots.

"The South African business is our core business," he said, adding the proposed sale of most of Old Mutual's 75% holding in Mutual & Federal for roughly R6bn would reduce the South African slice of the company's balance sheet by about 3% to 4%.

Sutcliffe described the short-term insurer as being on the fringe of Old Mutual's activities, which he said were focused on asset and money management.

"This has nothing to do with any lack of confidence in South Africa," he said.

Old Mutual earlier said it is in discussions to sell most of its stake in Mutual & Federal to Royal Bafokeng Holdings, the investment vehicle of the Royal Bafokeng Nation, a community of about 300 000 people that have substantial holdings in South Africa's mineral-rich North West province.

The indicative price, which is subject to due diligence by RBH, is R27.50 a share, an almost 5% premium to the 30-day volume-weighted average, Old Mutual said.

The price may be reduced to reflect any dividends paid by Mutual & Federal before any offer closes.

Mutual & Federal provides insurance services to the personal, commercial and corporate markets in South Africa, Namibia, Botswana and Zimbabwe.

The company in a separate statement said trading conditions in the short-term insurance industry remain highly competitive, although it managed a significant improvement in its underwriting result on the quarter in the third quarter of the year as it grew premiums and saw generally lower levels of claims.

For the nine months to the end of September, Mutual & Federal reported gross premium income of R7.02bn against R6.43bn a year earlier and said net earned premiums rose 6.5% to R5.82bn.

Old Mutual, meanwhile, said nine-month life assurance sales rose 13% on the year to £1.29bn, on an annual premium equivalent basis. The value of new business rose 9% to £191m, while funds under management were up 14% at £270.4bn.

Old Mutual Finance Director Jonathan Nicholls said that the company's exposure to the US subprime mortgage market was worth about $900m, which held a single A rating or higher.

"As of today, we haven't had to realize any losses," Nicholls said, adding the exposure wasn't having any effect on Old Mutual's underlying business.

Nedbank, South Africa's fourth-largest bank, said its headline earnings rose 31% for the first nine months and it continued to expect an up to 33% rise in earnings for the full year.

Headline earnings - the figure generally followed in the country, and which strips out non-operating, capital and certain other items - was R4.21bn against R3.22bn in the same nine months last year.

Attributable earnings for the period were up 25% to R4.25bn.

- Dow Jones News