Nedcor grows Namibian stake

Posted On Friday, 10 October 2003 02:00 Published by eProp Commercial Property News
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Johannesburg - Nedbank had increased its stake in the Commercial Bank of Namibia for R229 million, the retail banking arm of Nedcor said yesterday.

sipho pityana

 

 

 

 

 

 

 

 

Nedbank's stake in the Namibian bank grew from 47.3 percent to 93.26 percent in the deal. Nedbank bought BNP Paribas's 43.31 percent stake and Deutsche Investitions-und Entwicklungsgrsellschaft's 5.39 percent shareholding in the Namibian bank's parent company.

Sipho Pityana, the managing director of Nedbank Corporate's strategic business development division, said the transaction would help the bank entrench its position in Namibia.

Yesterday shares in Nedcor rose as buyers saw bargains in a stock hammered by the chief executive's planned departure, a disappointing earnings outlook and a ratings downgrade, dealers said.

Nedcor shares sank to their lowest levels in more than six years last month after the group said chief executive Richard Laubscher planned to leave at the end of the year - midway through the group's merger and reorganisation - and that its annual earnings would be below analysts' forecasts.

The stock has crept slowly higher since, but took a knock on Wednesday after international credit rating agency Fitch said it was downgrading its rating for Nedbank to C from B-C.

"I think the bad news is now in the price," said Kevin Brady, the head of equities at Investec Securities.

"We're definitely seeing bargain hunters".  

Nedcor had jumped 4.7 percent from Wednesday's close to R73.10 by 10.40am yesterday - off the low of R67 it hit in September. Its strong rise compared with a 0.6 percent climb in the sector, but traders noted trade in the stock was thin. Nedcor pulled back from its high by the closed to end R1.65 ahead on the day at R69.85.

At the time of the announcement, the group said it expected to name Laubscher's replacement in three to five weeks, which means the announcement is likely within the next week, which could also be supporting the stock price.

Nedcor, which is 53 percent held by London-listed insurance firm Old Mutual, has underperformed its sector by nearly 40 percent in the year to date.

Fitch said its ratings downgrade reflected low profitability from weak margins, the erosion of capital ratios due to rapid expansion, and the departure of Laubscher in the absence of a named replacement.

Nedcor has also sold down its stake in Dimension Data. The technology group was once worth more than R5 billion on Nedcor's books, but the bank has had to sell off its shrunken stake for just over R400 million.

Analysts are also betting the group, which took over smaller BoE last year, will have to reduce its dividend this year, given that its 2003 earnings are likely to fall between 9 percent and 30 percent. - Staff Reporter.

 

Last modified on Wednesday, 16 April 2014 16:56

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