HSBC is set to make its first acquisition since the credit crunch and break into the South African banking market.

HSBC is in exclusive discussions to buy 52 per cent of Nedbank, the country’s fourth-biggest lender, from Old Mutual. It wants to own 70 per cent of the lender.

The $US6.8 billion ($7.6bn) deal will allow HSBC to break into the South African market and give it a presence alongside Barclays, which owns 51 per cent of the market leader Absa, and ICBC of China, which has a 20 per cent holding in the number two lender, Standard Bank.

While HSBC could finance the deal without raising money, some believe the banking giant will go to its shareholders to raise a bit more than is necessary for the deal to further bolster its capital and to allow it to snap up other acqusitions.

The Nedbank deal underlines HSBC’s increasing interest in Africa as a complementary source of growth to its Asian operations. HSBC is keen to provide finance to the growing number of companies that trade between Asia and Africa.
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