UPDATE 5-HSBC in talks for 70 pct of S.Africa’s Nedbank

* Old Mutual, HSBC in exclusive talks on Nedbank stake

* HSBC could buy up to 70 pct of Nedbank for over $8 bln

* Deal would give HSBC better foothold in Africa

* S.Africa Treasury: Nedbank already foreign owned

* Nedbank, Old Mutual shares climb; HSBC steady

(Adds comment from South Africa Treasury, bank regulator)

By David Dolan and Kelvin Soh

JOHANNESBURG/HONG KONG, Aug 23 (BestGrowthStock) – HSBC (HSBA.L: )
(0005.HK: ) is in talks to buy up to 70 percent of South Africa’s
Nedbank (NEDJ.J: ) in a potential $8-billion-plus deal that would
give Europe’s biggest lender a broader gateway to the
fast-growing African continent.

HSBC and Anglo-South African insurer Old Mutual (OML.L: )
(OMLJ.J: ), which owns a 52 percent stake in Nedbank, said in
separate statements on Monday they were in exclusive talks.

HSBC will aim to buy up to 70 percent of South Africa’s
fourth-largest bank from Old Mutual and minority shareholders,
worth about 49.9 billion rand ($6.8 billion) at Friday’s close.

Analysts at Rand Merchant Bank and Keefe, Bruyette & Woods
valued the stake at up to $8.4 billion, assuming a premium of
about 30 percent.

South Africa’s Treasury said in a statement that while it
had not made any decision on the bid, it already considered
Nedbank as “effectively owned” by a UK-based company,
potentially removing a big regulatory hurdle to the deal.
[ID:nWEA5114]

HSBC has lagged rival Standard Chartered (STAN.L: ) in Africa
and a deal would bulk up its presence as more of its Asian
customers look to do deals on the resource-rich continent.

It also faces a growing threat from South Africa’s Standard
Bank (SBKJ.J: ), which is 20 percent owned by China’s Industrial
and Commercial Bank of China (1398.HK: ) (601398.SS: ), and is
positioning itself as a full-service corridor to Africa.

“This is the right thing for HSBC to do if it wants to focus
on emerging markets,” said Dominic Chan, an analyst at BNP
Paribas in Hong Kong.

“Trade between Africa and China has been growing very
rapidly, and HSBC doesn’t have the same presence there as
Standard Chartered, which makes this buy especially crucial if
it wants to continue expanding there.”

Shares of Nedbank and Old Mutual surged on the news, while
HSBC edged higher. South Africa’s rand rose slightly in early
trade on Monday, helped by the news of the potential deal.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ For a related Breaking views story, click on: [ID:nLDE67M0I9] For Reuters Insider coverage, see http://link.reuters.com/taz56n For a StarMine interactive table: http://r.reuters.com/nex56n For M&A graphics, see: League tables, volume trends: http://r.reuters.com/pyt56n Summer lull? M&A data for August: http://r.reuters.com/dag36n ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

LEAGUE TABLE NO-SHOW

HSBC did not make the top 10 for investment banking or
syndicated lending fees in sub-Saharan Africa in the first half
of 2010, according to Thomson Reuters data. Standard Chartered
was third in investment banking and top in syndicated lending.

South Africa’s head of bank regulation, Errol Kruger, told
Reuters early on Monday it was too early to comment on the deal:
“They still have to submit all the applications they need to go
through and then we’ll need to apply our minds to it.”

Kruger later told South African radio he saw the deal as
swapping one foreign owner for another.

Old Mutual CEO Julian Roberts told Reuters the group aimed
to unload its entire 52 percent stake in Nedbank but the exact
amount it sells hinged on minority shareholders.

Nedbank would remain listed in South Africa and Roberts said
Old Mutual would not have gone into exclusive talks without hope
of regulatory approval.

“If we’re left with a rump stake, that would be fine and we
would manage that into the future,” he said, adding the insurer
planned to use 1.5 billion pounds ($2.3 billion) from the sale
to pay down debt, with the rest to be deployed in South Africa.

Media reports had previously said Standard Chartered might
bid for Nedbank. Roberts said Old Mutual had been in talks with
other parties, but declined to elaborate. He also declined to
discuss the potential value of the deal.

A Standard Chartered spokesman in London declined to
comment. A source close to Standard Chartered said it had
considered the Nedbank stake but was concerned about overpaying.

Nedbank currently trades at about 1.3 times its forward
12-month book value, versus 1.6 times for bigger rival Standard
Bank and 1.3 for HSBC, according to Thomson Reuters StarMine.

BNP Paribas’ Chan said he estimated 1.8 to 1.9 times the
book value as a reasonable price for the deal.

Analysts at Keefe, Bruyette & Woods said a 30 percent
premium on Friday’s closing price would value Nedbank at 11.7
times 2011 forecast earnings. Standard Bank is currently trading
at 10.7 times forward 12-month earnings, according to StarMine.

The sale would help Old Mutual in its strategic overhaul to
slim down its complicated structure.

Nedbank, which said HSBC was an attractive international
banking partner, has been struggling with a money-losing retail
unit. This month it posted flat first-half earnings and said it
would struggle to meet its medium-term forecasts.

“HSBC is the global No.1 banking brand, so I’m certain they
would be able to help us,” Nedbank’s chief executive Mike Brown
told Reuters Insider.

Shares of Nedbank surged 6.5 percent to 139.90 rand in
Johannesburg, while Old Mutual gained 4.1 percent in London and
HSBC was up 0.8 percent.

HSBC is being advised by Lazard (LAZ.N: ), while Lexicon,
Rothschild and Bank of America Merrill Lynch (BAC.N: ) are working
with Old Mutual. Credit Suisse (CSGN.VX: ) is advising Nedbank.
(Additional reporting by Tiisetso Motsoeneng in Johannesburg;
Sudip Kar-Gupta and Quentin Webb in London and Alison Leung in
Hong Kong; Editing by Marius Bosch and Mark Potter)
($1=7.296 Rand)
($1=.6413 Pound)
(Editing by Jon Loades-Carter)

UPDATE 5-HSBC in talks for 70 pct of S.Africa’s Nedbank