HSBC's pounce on Nedbank can only be positive for banking

The Rand strengthened. The JSE rallied. The country's registrar of banks described it as "a vote of confidence in South Africa". Nedbank's Ceo Mike Brown said he would be pleased to have such a "strong international banking partner".

HSBC's announcement that it has entered into exclusive talks to buy a 70% stake in Nedbank, the smallest of the country's "big four" banks, has been welcomed. So far everyone seems to be happy, with the notable exception of Standard Chartered, Hsbc's rival in emerging markets, which until recently seemed to be in pole position to acquire Nedbank and is now presumably quietly fuming.

The positive outlook is shared by recruiting experts, given HSBC's clear determination to grow and invest in Africa and the fact that there is very little overlap between the two banks. HSBC does not have a retail presence in SA while Nedbank's investment banking business is the smallest of the "big four".

"Foreign investment in our economy is always a positive thing and Hsbc are making a clear statement of their commitment to South Africa," says Phryne Williams, director of Capital Assignments, a financial services recruiting firm. "It is a fantastic move for Hsbc who want to expand into Africa and it should lead to more job creation in the industry which is always welcome."

HSBC has two months to come up with a firm offer and to somehow keep regulators, politicians and shareholders sweet. There are hurdles to be overcome and, to use a well-worn phrase, there is no guarantee of a deal. Europe's largest bank is expected to offer a premium and could end up paying 4.5bn. Trade finance is at the heart of the offer: Hsbc has said it wants to expand in Africa because more and more Asian companies trade with Africa and HSBC gets half of its profits from Asia.

Nedbank's attractiveness in HSBC's eyes is mainly due to its partnership with Ecobank, which represents the largest banking network in Africa, with over 1,000 branches in 33 countries. "Nedbank has a good reputation in the SA market, but this is not what Hsbc is interested in," says Michael Fraser, manager of banking at Robert Walters Professional Recruitment Services in Johannesburg. "HSBC is mainly doing this to get a presence in Africa with a very long-term strategy." Most of the job creation, therefore, is unfortunately likely to be outside SA.