HSBC bid ups Nedbank rating

HSBC’S proposed acquisition of a majority stake in Nedbank received a ringing endorsement yesterday as the Fitch credit ratings agency said it had put the South African bank on a positive rating watch pending completion of the deal.

Anthony Walker, a senior director in Fitch’s financial institutions team, said the acquisition “should serve to strengthen and expand Nedbank’s position in the South African banking sector [and] support its strategy of growing its African franchise”.

The move by Fitch comes after HSBC on Monday confirmed it had entered into exclusive talks with insurer Old Mutual to acquire up to 70 per cent of Nedbank, beating off stiff competition from the likes of emerging markets-focused rival Standard Chartered.

The deal is dependent upon Old Mutual gaining regulatory clearance from the South African Reserve Bank (SARB) to transfer £1.5bn of the proceeds of the sale over to the group balance sheet in order to pay down its debt.

However, the group has appeared confident of its chances, with chief executive Julian Roberts commenting that the firm would not have entered exclusive discussions without anticipating clearance from regulators.

Analysts have speculated that a deal would be struck at a premium of around 20 per cent to Nedbank’s current market value, meaning that HSBC may pay out anything up to around £5bn for its stake. The bank is eager to ramp up its presence in South Africa, which is currently negligible.

Nedbank chief executive Mike Brown yesterday said he would be keen to stay at the helm of the company if the HSBC deal goes through.