One of the mysteries of the 2001 Global Custodian agent bank survey was the fall in client responses for Nedbank in a year. But if the current Rand 7.3 billion ($650 million) by Nedcor – the 53 per cent owned South African banking subsidiary of the London-listed Old Mutual group – for Board of Executors (BoE) bank goes through, it might rejuvenate the bank’s custody offering because BoE has a good corporate client list and asset management and private banking businesses offshore as well as onshore.
A successful bid would turn Nedcor into the biggest bank in South Africa, ahead of ABSA, Standard Bank, FirstRand and Investec Group Ltd. But it is not certain to go through. Despite the troubled recent history of a number of South African banks – notably Saambou Bank – the authorities have not encouraged a consolidation of the six largest banks. Only two years ago the government blocked a hostile bid by Nedcor for Standard Bank, which remains the largest custodian in South Africa.
But smaller banks outside the Big Six, such as BoE, do look vulnerable. Difficulties at BoE, prompting a run on deposits earlier this year after the collapse of Saambou Bank, mean the bank has lived with a takeover tag for some while. Indeed, BoE has already sold its retail mortgage book to FirstRand. And the Nedcor-BoE deal would almost certainly not have been announced without the blessing of the regulatory authorities, especially when the government is on the line as guarantor of BoE’s deposits.