Shares in South Africa's second-biggest banking group, FirstRand, jumped nearly 5 percent on Monday as investors shrugged off the firm's denial that it was in merger talks with Citigroup. FirstRand shares gained as much as 4.73 percent to 15.50 rand before paring gains to trade 1.55 percent stronger, still outperforming the JSE Securities Exchange's banking sector which was 0.22 percent firmer.
While FirstRand denied on Friday it was in talks with Citigroup, traders said the South African group's admission that it had held talks with a number of foreign banks meant consolidation within the South African banking sector was continuing.
"FirstRand said they have been in talks with those banks. Investors are thinking that it is only a matter of time before there is some action," one Johannesburg trader said.
On Friday, FirstRand moved to halt market speculation that Citigroup was likely to buy its banking arm, First National Bank. The talk pushed FirstRand's stock sharply higher.
FirstRand said in a statement to the Johannesburg bourse on Friday that it held discussions with international banks from time to time but denied it was in talks with Citigroup, the world's biggest banking group.
Take-over rumours of FirstRand or its units have swirled since Britain's Barclays Plc made a play for a majority stake in South Africa's biggest bank, Absa, last year. Absa agreed to sell a 60 percent controlling stake to Barclays and the deal is set to be completed by July 27.