Old Mutual backs plan to hold on to Nedbank

ANNUAL savings realised through synergies between Old Mutual, Mutual & Federal (M&F) and Nedbank have reached more than N$1 billion.

This is according to a statement by Old Mutual, in what has been seen as a bid to lull persistent rumour that it wanted to sell its 53 per cent stake in Nedbank.
‘The untapped potential for even further synergies is a prize worth fighting for,’ Julian Roberts, the chief executive of the international wealth manager, said in the company’s latest annual report.
‘(Nedbank chief executive) Tom Boardman sits on the Old Mutual group executive committee precisely because the extraction of this value is too much of a priority not to have the bank represented at the highest levels of the parent company.’
Analysts have urged Old Mutual to sell its Nedbank stake because the latter would become increasingly non-core as Old Mutual became an international wealth manager.
Late last year, Old Mutual said it was no longer going to sell M&F, bringing to a close four months of uncertainty for the short-term insurer.
Steve Meintjes, a senior analyst at Imara SP Reid, said management expected advances to grow by 10 per cent and non-interest revenue by about five per cent. This plus a continued strengthening of adequacy ratios meant the bank would not be a liability to Old Mutual.
‘Despite the Ecobank deal, Nedbank has minimal exposure to Africa, but like its local peers remains very sound,’ Meintjes said.
Roberts said Nedbank was a very well-run business that had weathered the effects of the global credit crunch.
He said the shape and history of Old Mutual in South Africa made Nedbank an important element of its financial services offering.
‘Not only are the financial needs of Old Mutual and Nedbank’s customers comprehensively covered through the products and services of both companies, but the potential for each company to sell to each other’s customer base is enormous.’
This year, he said, South Africa was predicting positive gross domestic product growth with a rising number of middle-income consumers entering the banking system.
In March, the Observer on Sunday reported that Old Mutual was looking to sell its 53 per cent stake in Nedbank. It reported that Standard Chartered had been sounded out about buying the stake in Nedbank. HSBC was also cited as an interested party.
-Business Report