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Going by media reports, the deal is estimated to be worth around USD 6.8 billion.
"HSBC Holdings Plc has entered into exclusive discussions with Old Mutual plc about possible acquisition of a majority stake in Nedbank Group Limited, South Africa's fourth largest banking group by total assets," it said in a filing to the London Stock Exchange.
"The discussions are ongoing and if successfully concluded, would be conditional on, among other matters, obtaining necessary regulatory approvals," the filing added.
However, the filing did not mention the consideration involved in the deal.
In a separate announcement, Old Mutual Plc stated it has received a proposal from HSBC Holdings Plc for acquisition of an around 70 per cent stake in Nedbank Group.
"The proposed transaction, if and when it proceeds, would be implemented by way of a partial offer to all Nedbank Group shareholders to acquire up to 70 per cent of Nedbank Group shares," Old Mutual Plc said in the statement.
However, the making of a binding offer by HSBC is subject to a number of pre-conditions, it added.
Nedbank, has a market capitalisation of around 6.2 billion pounds and going by reports, can provide a launch pad for HSBC to break into other countries in the region.
HSBC Holdings Plc, the parent company of the HSBC Group, is headquartered in London.
The group, which serves millions of customers across 87 countries and territories in Europe, the Asia-Pacific region, North America, Latin America and the Middle East, has a strong presence in India as well.
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Last month, HSBC, which is in an expansion mode in emerging markets, agreed to buy the Indian commercial and retail banking assets of British banking firm Royal Bank of Scotland for USD 1.8 billion.
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