"Consequently Old Mutual is no longer in discussions with HSBC concerning its shareholding in Nedbank," the insurer, who is the majority owner of Nedbank, said in a statement.
HSBC's offer was expected to see it take a controlling 70 percent stake in the South African bank, including Old Mutual's current 52 percent stake in the company.
Two months ago HSBC said it was eager to expand in South Africa so it could take advantage of links between Africa and China.
While a price tag was never made public, it had been estimated the deal could have had a value of around R45 billion.
Old Mutual said in Friday's statement that the reasons for HSBC's withdrawal had not been disclosed, but were not, as far as Old Mutual was aware, related to any adverse findings during HSBC's due diligence study.
"Old Mutual confirms that its strategy continues to be focused on long-term savings, protection and investments."
In light of Friday's development, Old Mutual said it would evaluate its other options concerning the shareholding in Nedbank and make further announcements in due course.
Just R20 for the first month. Support independent journalism by subscribing to our digital news package. 