Mideast investment banking fees fall to seven-year low

The total fee activity fell 8% to the lowest since Q2 2005

The amount of fees earned by Middle East investment banks fell eight percent to US91m, their lowest point for nearly seven years, a new report found.

The Thomson Reuters Q1 2012 regional investment banking review shows debt issuance nearly doubled to US$11bn and mergers and acquisitions (M&A) reached US$4.9bn, a year-on-year rise of 22 percent. However, equity capital market issuances tumbled 21 percent to US$1bn and banking fees declined 8 percent to US$91m.

The review examined the performance of the Middle East investment banking industry in the region's debt and equity capital markets, both conventional and Islamic.

“Investment banking fees fell this quarter continuing last year's trend as the Arab Spring continues to take its toll on the banking sector. This quarter was the lowest quarter for fees in the region since the second quarter of 2005," said Russell Haworth, Managing Director, Middle East & Africa at Thomson Reuters.

M&A fees during the first quarter of 2012, which accounted for 51 percent of the overall fee pool, totaled US$46.2m, down 42 percent from the same period last year.

However, debt capital markets (DCM) fee activity in the first three months of the year was more than five times higher than during the same period in 2011 at US$36.2m.

The top performing bank for DCM fee earnings was Deutsche Bank, earning 13.1 percent of the fees, while HSBC headed the M&A fee rankings with US$5.3m.

The telecom sector was the main sector for M&A, generating US$1.8bn and accounting for 36 percent of activity.

In terms of location, Egypt was the most active Middle Eastern country with US$1.9bn for 39 percent of the quarter's activity.

The biggest deal during the quarter was Golden Investments Co's US$987m bid for Damas International in March.

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