Nedbank, South Africa’s fourth-largest bank, has agreed to buy the 50 percent of Old Mutual Bank it does not already own from UK-based life insurance and financial services group Old Mutual, for ZAR140 million ($20.95 million). The Old Mutual Bank brand will be dropped and the bank rebranded under the Nedbank banner.
In a statement, Nedbank said Old Mutual Bank, a joint venture set up by Nedbank and Old Mutual in 2003, will be fully integrated and will trade as Nedbank in future. It is aiming to complete the integration by June 2008 and expects to save around ZAR60 million a year as a result of the transaction. As many as 32 of the 46 Old Mutual branches may close and the rest will be rebranded as Nedbank.
Initially set up to focus on providing banking products and services such as home loans, auto finance, credit cards, investments and savings accounts to the clients of Old Mutual, the bank’s growth was constrained by its relatively small branch network.
Nedbank says: “The integration will enable the group to realise significant cost savings due to the elimination of overlapping branches and infrastructure, enlarge its branch footprint under the Nedbank brand and build on success that Old Mutual Bank enjoyed as a result of the support of Old Mutual’s intermediary sales channel.”
Old Mutual Bank has client deposits of ZAR10.7 billion and advances – primarily consisting of mortgages to Old Mutual clients – of ZAR10.5 billion.
Meanwhile, rumours continue to circulate that Old Mutual Group is considering selling its 51 percent stake in Nedbank. UK-headquartered Standard Chartered is considered as a possible buyer.