Merger mania in the financial sector may be moving to the southern hemisphere. There was evidence of the trend in London on Thursday as shares in Old Mutual, the big South African insurer, made a rare appearance at the top of the FTSE 100 leaderboard, rising more than 4 per cent.
The catalyst for the move was a report in the South African press stating that British-based emerging market bank Standard Chartered is eyeing a stake in South Africa’s s fourth largest bank, Nedbank, which is majority owned by insurer Old Mutual. In South Africa, Nedbank shares initially jumped six per cent on the story in Business Day, before falling back slightly.
Business Day said that discussions between the two had been going on for some time. Christopher Low, Standard Chartered’s South Africa’s chief executive, was quoted as saying the country was “core” to the group’s strategy to expand its business in the rest of Africa, and refused to rule out buying locally should an opportunity present itself.
Mild stuff – but the tale was clearly being taken seriously in London as Johannesburg has a reputation for being something of a well-informed market. And Standard Chartered has been in the frame as a potential acquirer in the South African market since before Barclays snapped up Absa, the country’s largest retail bank, back in 2004.