Could an EFG Hermes takeover prevent both a break-up and more redundancies?

Staff at Middle Eastern investment bank EFG Hermes have had reason to worry of late – profits have tumbled by 64% year-on-year, bonuses have been slashed back, redundancies have been rolled out and the bank is focusing on cutting costs as deals in the sector remain hard to come by.

Is salvation at hand? Maybe, depending on your point of view.  A consortium of investment and commercial banking professionals – operating under the name Planet IB – want to acquire 100% of the firm in an attempt to keep it “intact and prevent its break-up”.

Any takeover usually elicits some sweaty palms among the incumbent employees, but the acquirer is insisting that EFG Hermes’ staff are a major reason for the bid.

"EFG Hermes is a storied brand with hundreds of talented, hardworking employees. It is quite literally the pioneer investment bank in the Middle East and North Africa,” said Ahmed El Houssieny, chief executive officer of Planet IB. “We are offering a unique opportunity for the firm to realize its full potential through a focused and actionable strategic vision based on vertical integration, an enhanced product offering, expansion into Africa, and considerable cost reductions at all levels while keeping staff intact and motivated.”

The bank is also due to vote on 2 June on a potential tie-up with Doha-based QInvest, on the creation of a new investment bank.

Employee expenses in EFG Hermes’ investment bank declined by 44% in 2011 to E£118m ($19.5m) as headcount was reduced by over 100 and bonuses slashed back. Profits in the division tumbled to just E£3m, down from £1bn in 2010. Its commercial bank is faring better, with ­­employee costs rising by 24% year-on-year.