Old Mutual, the London and Johannesburg-listed insurance group, has declined to comment on a report that it is planning to offload its 53% holding in South Africa’s Nedbank, saying it does not comment on market speculation.
“This is market speculation and we don’t comment on market speculation,” a spokesperson for the group said from London.
According to a Sunday report in the London Observer newspaper, Old Mutual has sounded out Standard Chartered about a possible deal.
Although a sale is some way off, new chief executive Julian Roberts is expected to indicate that the stake in Nedbank, one of South Africa’s largest banks, is no longer core to Old Mutual’s global operations when he announces the results of a strategic review along with the group’s full-year figures on Wednesday, the newspaper said.
It quoted city sources as saying that Standard Chartered is interested in Nedbank, as is HSBC.
Old Mutual’s Nedbank stake is currently valued on the Johannesburg stock exchange at about £2,5-billion (R36,4-billion).
According to the report, the insurer is under pressure from shareholders to boost its stock price after a number of setbacks, including a profits warning in the summer that led to the resignation of former chief executive Jim Sutcliffe in September.
Old Mutual was forced to inject £250-million (R3,6-billion) into its US life business last year to meet guarantees in policies after hedges
failed to protect it against stock market falls.
Any buyer of Old Mutual’s Nedbank stake would be obliged to bid for the whole bank unless it obtained a waiver from the South African authorities.
Saying the high interest rates and the global economic slowdown had impacted its earnings, Nedbank on Thursday reported a 2% decline in diluted headline earnings a share for the year ended December 2008 from 1 429 cents to 1 401 cents.
The South African banking group also cautioned on Thursday that as a result of the slowing economy, the current outlook for headline earnings in 2009 is about 10% lower than the headline earnings for the 2008 financial year.
The outlook for basic earnings and diluted earnings a share is about 20% lower, as the group does not anticipate a capital profit similar to the profit on the sale of Visa shares in 2008. — I-Net Bridge