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Tue 19 Jan 2016 01:47 PM

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MidEast investment banks record 16% drop in fees, lowest since 2012

Decline seen despite mergers and acquisition activity rising to its highest level since 2008, says report

MidEast investment banks record 16% drop in fees, lowest since 2012
(Getty Images)

Middle Eastern investment banks recorded a 16 percent year-on-year drop in fees to $636.4 million last year, despite the value of merger and acquisition (M&A) transactions rising to the highest level since the financial crisis of 2008, according to research by Thomson Reuters.

“The value of announced M&A transactions with any Middle Eastern involvement reached $56.2 billion during full year 2015, 13 percent more than the value registered during the same period in 2014 and marking the best annual period since 2008,” said Nadim Najjar, managing director, MENA, Thomson Reuters.

As a result, revenue from investment banking fees related to completed M&A transactions amounted to $213.1 million in 2015. This represented a year-on-year increase of four percent and marked it out as the only investment banking sector in the region to see a year-over-year increase.

However, the healthy state of the M&A sector was not representational of the investment banking market as a whole, which totalled $636.4 million last year, a year-on-year decline of 16 percent and the lowest point since 2012.

“Middle Eastern equity and equity-related issuance totalled $5.7 billion during the full year 2015, a 50 percent decline from full year 2014 and the slowest annual period for equity capital markets issuance in the region in two years,” said Najjar.

M&A fees accounted for 33 percent of the overall Middle Eastern investment banking fee pool, the highest annual share since fee records began in 2000. Its growth was at the expense of equity capital markets underwriting, which declined 33 percent compared to last year, while syndicated lending fees totalled $278.6 million, down 16 percent from 2014. Fees from debt capital markets underwriting declined 33 percent year-on-year to $59.1 million.

HSBC earned the most investment banking fees in the region last year, a total of $62.9 million for a 9.9 percent share of the total fee pool. HSBC also topped the completed M&A fee rankings, while Nomura was first for debt capital markets underwriting. EFG Hermes took the top spot for equity capital markets underwriting fees in the region with 15.5 percent share. Mitsubishi UFJ Financial Group took the top spot in the Middle Eastern syndicated loans fee ranking with $18.2 million in fees for 6.5 percent of the market.

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Jon Castano 4 years ago

I'm surprised there is not mention of oil & gas here. The financing world that has relied on oil & gas (e.g. http://investmentbank.com/energy/ ) is one of the biggest reasons for the hurt in the middle east right now. Good for the consumer. Not for investment banks.