HSBC looks to Africa for growth
According to newspaper reports, HSBC is the front runner to buy a controlling stake in South Africa's fourth largest banking group by assets, Nedbank.According to reports in the Financial Times, HSBC is in discussions to buy a majority stake in South Africa's fourth largest banking group by assets, Nedbank.
HSBC is believed to be the front runner for the acquisition of a 52% stake in the bank, although one of its major competitors in emerging markets, Standard Chartered, is a rival bidder for the South African bank which offers investment, corporate, business and retail banking.
While HSBC's core market is Asia, which contributes more than half of its profit, Africa is on the radar of a number of foreign banks which are stepping up activity in the region given its strong trading relationships with the rest of the world, including Asia. No surprises then that HSBC wants a slice of the action and those trade flows.
Unlike Standard Chartered, which has enjoyed a presence in South Africa for hundreds of years, HSBC only established a presence in the region in the mid-1990s and operates out of its regional hub in Johannesburg. Its principal businesses in the region include its Global Banking and Markets franchise, which encompasses investment banking, as well as commercial banking for corporates and its offshore personal bank.
Acquiring a majority stake in Nedbank would give it a more extensive franchise and network coverage across the region and enable it to better service the needs of its existing corporate customers that are doing business in Africa.
Chinese banks are also keenly interested in the South African market with the Industrial and Commercial Bank of China buying a 20% stake in Standard Bank back in 2007. The two banks have since gone on to work together in jointly financing major projects and trade finance deals.
Date Posted:23rd August 2010