Investec Share News (INVP)

Fri, 27th Jan 2012 10:14

By David Dolan and Carmel Crimmins

DUBLIN/JOHANNESBURG, Jan 27 (Reuters) - Investec has agreed to buy Irish unlisted broker and wealth manager NCB for 32 million euros ($42 million), as part of the South African bank's strategy to cut its reliance on traditional lending.

Investec, a $1.9 billion investment bank and fund manager, said it planned to pay for NCB in cash, although it could issue preference or ordinary shares to help fund the deal.

Buying NCB will give Investec control of a firm with a presence in corporate finance, equities and fixed income. NCB also has 1.3 billion euro in assets under management in its wealth business, an increasingly important focus for Investec.

Investec has been bulking up in wealth management and other fee-generating businesses, to offset slack demand for credit and as tougher regulations tie up more capital.

'As a small bank you just do not have the funding advantage to compete in the lending game,' said Patrice Rassou, head of equities at Sanlam Investment Management.

'While a lot of these (wealth) businesses are linked to the markets, there's a lot more annuity income from fees that you levy on clients.'

Investec's CEO for Ireland, Michael Cullen, said the deal would complement its existing capital markets operations in Ireland and help it further expand into fee-based businesses.

Investec, which is also listed in London, last year acquired mid-sized British investment bank Evolution Group for 233 million pounds.

Previously it acquired another UK firm, Rensburg Sheppards, which it has since rebranded as Investec Wealth & Investment.

Asset and wealth management account for about 40 percent of the bank's operating income, compared with 29 percent in 2010.

Investec's full-year profit in May fell by 5 percent, hit by exposure to Irish real estate through its private banking business.

Shares of Investec were flat in Johannesburg trade at 48.94 rand at 0930 GMT, slightly outperforming a 0.3 percent drop in the benchmark Top-40 index. ($1 = 0.7601 euros)



(Editing by Helen Massy-Beresford) Keywords: INVESTEC NCB/

(carmel.crimmins@thomsonreuters.com)(+353 1 500 1529)(Reuters Messaging: carmel.crimmins.thomsonreuters.com@reuters.net)

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