HSBC Holdings is in negotiations with British insurer Old Mutual to buy majority stake in South African lender Nedbank Group for approximately $6.8bn.

HSBC intends to expand its presence in Africa as more Asian firms, where the London-based bank gets more than 50% of its profit, trade with the continent.

Old Mutual, which holds nearly 52% stake in Nedbank, wants to off load it stake as it aims to slim down its complicated capital structure and focus mainly on the long-term savings market.

The proceeds of the transaction will be reinvested partially in other South African operations, while the remainder to reduce the group’s debt by as much as GBP1.5bn.

Nedbank in a statement said HSBC represents an attractive international banking partner, and could provide the financial strength needed to help the bank boost its position in the South Africa and other African markets.

Standard Chartered is also said to be in fray to acquire Nedbank stake.