Roberts dismisses Nedbank sales talk

Johannesburg - Old Mutual [JSE:OML] CEO Julian Roberts reiterated on Thursday that Nedbank is a key driver of earnings for the group over the next year, effectively dismissing suggestions that the bank may be sold.

In an interview with Fin24.com, Roberts said Old Mutual will remain "consistent with the guidance give at the strategic update earlier in the year". He was responding to rumours that Old Mutual was looking to divest its 52% stake in Nedbank, supposedly to international banking group Standard Chartered.

At the time of its strategic update, Roberts said the only business Old Mutual was looking to dispose of was the loss-making US life division. All other units were given clear return-on-equity targets.

Roberts said the group's South African banking and insurance operations would likely be core earnings drivers, while he also expects continued improvement in the US asset and wealth management sectors.

However, he is wary about the challenges facing the European Union in coming years.

"In Europe and the UK, government debt is too high. The new [UK] government is going to have to do something to address the size of the debt burden," he said. This, Roberts said, is likely to lead to tax hikes and a subsequent cut in consumer spending.

"This is not good for the [European] savings market," he said.

Less speculation in Old Mutual shares

Roberts and finance director Julian Broadley both said they did not believe there was excessive speculation in the company's shares.

In 2009 there was some concern that speculators had driven the share prices of UK banks and insurers lower by taking big bets that the stocks would fall.

Shares in Old Mutual, already hurt by the financial crisis, halved from 900c to a low of 454c a share from the start of January 2009 to March 8 2009, before rebounding strongly to 1 470c six months later.

Stocks have also been volatile over the past seven days, falling from a high of 1 345c a share to 1 190c before recovering back to around 1 330c.

"There is actually a lower number of short positions in Old Mutual than there was a year ago," said Broadley.

Roberts said shareholders should expect some volatility over the next few weeks, as portfolio managers reweighted their positions toward the end of the quarter and dealt with currency variations for the dual-listed stock.

"We regularly meet and communicate with both our long- and short-term shareholders," said Broadley.