HomeNewsNedbank, MBCA cautious of HSBC deal

Nedbank, MBCA cautious of HSBC deal

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Mike Brown, the CEO of South Africa’s Nedbank Limited, is expected in Harare this afternoon to brief MBCA Bank Limited’s management and staff on three key issues, including HSBC Holdings plc’s offer to buy 70% of Nedbank in a deal estimated at $6,8 billion.

Brown will be accompanied by his executive team.
MBCA Bank yesterday said Brown’s special visit would dwell on the group’s interim financial results, the bank’s vision and on the latest information about HSBC’s proposal to acquire a majority stake in Nedbank, South Africa’s fourth largest lender, which controls about 70,85% of MBCA Bank.

Nedbank bulked up in MBCA to 70,85% from 50% last year through a rights issue offered to recapitalise the bank in terms of the Reserve Bank of Zimbabwe’s minimum capital requirements of $12,5 million.

“While the conclusion of a proposed transaction with a global bank like HSBC may speed up the delivery of Nedbank’s vision, the group’s success is not dependent on the transaction going through and there are still numerous regulatory and other hurdles to overcome,” MBCA said.

“The group is in good shape. This is reaffirmed by a sound set of interim financials, compelling growth prospects and the fact that strong leadership teams are in place in South Africa and Zimbabwe.”

For the first half of the year, MBCA reported an increase in both deposits and intermediation.
Last month, HSBC — the largest lender in Europe
announced an interest to buy 70% of Nedbank Limited in a deal from which it would emerge as the ultimate parent of MBCA Bank.

Under the proposed acquisition deal, HSBC would buy out Old Mutual South Africa — a 52% shareholder of Nedbank — and a few other minorities from which it would piece up an additional 18% equity interest.

Old Mutual has disclosed it would completely pull out of Nedbank in a deal estimated at about R49,9 billion or $6,84 billion.

However, the Nedbank-MBCA deal has many regulatory hurdles to overcome to reach financial closure. South Africa’s regulators say a deal would not be possible this year.

A few days after HSBC announced its interest in Nedbank, South Africa’s central bank chief Gill Marcus reportedly said foreign control of local banks would bring risks to the industry.

“It does create a situation of complexity and that needs careful consideration,” she reportedly said.

The largest economy in South Africa has a notorious record of frustrating cross-border mergers and acquisitions deals, including the proposed merger of MTN and India’s Bharti Airtel.

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