HSBC backing away from South African Nedbank: report

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HSBC is close to turning its back on an eight billion dollar plan to purchase South Africa's Nedbank as exclusive talks with majority owner Old Mutual come to an end, a report said Friday.

London-based HSBC will not make an offer for Nedbank within the two-month timeframe for exclusive talks, which ends at the weekend, as the due diligence process has proved unexpectedly complex, sources close to HSBC told The Financial Times.

HSBC may remain interested, but would face competition from rival bidders, notably arch-rival Standard Chartered, the report said.

HSBC's pursuit of the South African bank was largely driven by outgoing chief executive Michael Geoghegan, who was keen to expand the Asia-heavy institution's footprint into fast-growing Africa.

However Geoghegan is now due to leave following a bruising clash within HSBC's top management.

Bankers told the Financial Times that Nedbank's retail business contained credit risks that HSBC might find hard to stomach.

If HSBC does drop out, Old Mutual might have to reconcile itself to a lower price for its stake, below the 15 percent premium to Nedbank's market price that had been a benchmark, the report said, citing Standard Chartered executives.

© 2010 AFP

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