Johannesburg - Shares in Nedbank Group [JSE:NED] have fallen
5% in early training following media reports that international banking group
HSBC may back away from a bid to buy the group.
By 9:20, Nedbank shares were down 686c to trade at R139.94.
HSBC has an exclusive agreement with Nedbank parent Old Mutual
[JSE:OML] to conduct a diligence on the group as part of a potential
acquisition. This is due to expire at the end of this weekend.
The share sold off on the back of press reports in the
Financial Times citing sources close to HSBC. This could create an opportunity
for competitor Standard Chartered to make a counter offer for Nedbank.
If HSBC does drop out, Old Mutual might have to reconcile itself to a
lower price for its stake, below the 15% premium to Nedbank's market price that
had been a benchmark, the report said, citing Standard Chartered executives.
South African-based asset management firm ValuGro commented
on Twitter: "[This] leaves the door open for Standard Chartered to go
after Nedbank, but no doubt Old Mutual will experience some price pressure for
Old Mutual was trading down 52c (3.3%) at 1 532 cents per
HSBC's pursuit of the South African bank was largely driven by
outgoing chief executive Michael Geoghegan, who was keen to expand the
Asia-heavy institution's footprint into fast-growing Africa.
However, Geoghegan is now due to leave following a bruising clash
within HSBC's top management.
Bankers told the Financial Times that Nedbank's retail business
contained credit risks that HSBC might find hard to stomach.