The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.
Opinion

Nedbank: HSBC leaves Africa in the lurch

The cancellation of the Nedbank acquisition reflects badly on HSBC.

Africa bulls will say it was shortsighted of HSBC to cancel its $7.3 billion bid for South Africa’s Nedbank last month. Others will say the affair reflects badly on HSBC’s management more generally: if it wasn’t interested, it shouldn’t have bid.

Although HSBC has not been prepared to give a detailed explanation, a spokesperson hints that due diligence might have revealed a less compelling business case than expected. Indeed, despite efforts to improve fee income, Nedbank’s earnings are too reliant on asset growth. Its retail franchise is in disarray, bulking up the cost base. This cannot be fixed quickly, and other South African banks continue to enjoy higher returns.

But such problems could have been discovered before HSBC entered exclusive talks with its target. The main development since the summer, when the bid was announced, has been the departure of HSBC’s chairman and chief executive, although HSBC denies that this has anything to do with the Nedbank decision.

One advantage of buying a South African bank is the launch pad it gives to the rest of the continent. South Africa is Africa’s biggest economy, and home to the most developed banks and capital markets. If structural unemployment can be eroded and more South Africans get bank accounts, banks will enjoy good growth in the country.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree