Pretoria - Insurance giant Sanlam and the Absa banking group have signed a memorandum of understanding on formal business co-operation.

Numerous projects would be pursued in partnership under the deal, the two companies said in a statement on Monday.

"The groups will develop business plans and structures to harness potential synergies through strategic business co-operation," the statement said.

"Several co-operation projects will be pursued in the next few months, including distribution, data broking, trust business, bond and banking products, life insurance, small and medium business development and financial transactions."

The memorandum came about nine months after Sanlam ruled out a merger with Absa.

The two groups said Sanlam would offer some of its activities, such as the investment banking business, to Absa in line with the aims of the co-operation projects.  

Sanlam chief executive Johan van Zyl said sound business principles and service excellence would be the foundation of the envisaged co-operation between the two groups.

"It is a major step forward for Sanlam to ensure it maximises opportunities flowing from its large shareholding in Absa."

Working close with Absa would complement Sanlam's existing product offering, Van Zyl said.

Absa chief executive Nallie Bosman said: "We are determined that the co-operation must deliver positive financial outcomes for both groups. The benefits will be realised over the next few years." - Sapa