UK-listed South African insurer Old Mutual (OML) is committed to maintaining its 53% stake in Nedcor Limited (NED), one of South Africa’s “big four” commercial banks,” a spokesperson for Old Mutual confirmed on Monday.
The UK’s Business newspaper reported on Sunday that Old Mutual has approached several leading international banks to help sell its Nedcor stake following a difficult year at the bank that saw its share price decline by 52% in 2003 and the necessity of a R2-billion rand recapitalisation, as unveiled on December 22.
“As we said in December, we are committed to maintaining our stake in Nedcor,” said Old Mutual’s Director for Investor Relations, James Poole. “The story is speculative and we don’t comment on speculation.”
Both Old Mutual and Nedcor are in closed periods ahead of the release of their final results to end-December 2003. Old Mutual is set to announce its results on February 23 and Nedcor has already warned that it expects to record a loss for the year.
As part of the announcement of Nedcor’s recapitalisation, Old Mutual Finance Director Julian Roberts stressed several times that the group was fully behind the bank’s five-point turnaround plan devised by newly appointed CEO Tom Boardman.
An analyst with an investment bank who did not want to be named said it would be foolhardy for Old Mutual to attempt to sell its Nedcor holding at a time when the share price was so low.
“The share has fallen by over 50% in 2003 and people are taking a ‘wait and see’ attitude as to whether the new management will deliver the turnaround, so it really would be a terrible time to sell,” he commented. “We don’t believe the story, but some people are using it as an excuse to buy today.”
Nedcor shares were last quoted up 4,1% or R2,51 on the JSE Securities Exchange South Africa, at R67,15, from R64,49 at Friday’s close, with over 574 00 shares having changed hands.
The counter has recovered some ground after reaching a 12-month low of R56,40 on December 22, 52% lower than the 2003 high of R118,50, reached on January 15. – I-Net Bridge