Why EFG’s employees are key to any takeover bids
There are two things that EFG Hermes employees can take from the storm around the unwanted takeover battle engulfing the firm – any potential suitors are eager to acquire the expertise in the firm and, longer term, people remain optimistic about investment banking in the Middle East.
Last week, EFG Hermes shareholders approved a joint venture deal with Qatari investment bank QInvest, which injected $250m in return for control of the bank. At the same time, it was also fighting an unwanted rival bid for the entire group from Planet IB – a consortium of financiers backed by Arab and Egyptian investors.
As we pointed to previously, one of the key reasons that the bank has a number of potential suitors is its staff. Commenters appear keen to reiterate this point in an article in the FT this morning.
“It is a good franchise with a good team of people,” said Aybek Islamov, analyst at HSBC. “EFG proved on many occasions that they were professional and able to lead deals and work alongside international banks and have equal expertise in the market.”
For a bank where arguably its staff are the greatest asset, EFG Hermes isn’t exactly going out of its way to keep them happy, particularly in the investment bank. It’s been cutting back bonuses, and reducing headcount for some time now, but its first quarter report – during which it posted a net profit of just E£35m ($5.8m) – shows this process is ongoing.
Staff costs fell by 8% on Q4 in its investment bank and by 26% in its capital markets and treasury operations.
Nonetheless, Ahmed El-Houssieny, Planet IB’s chief executive, believes that investment banking activity in the region could soon pick up.
“We think there is lot of merit to an agile, nimble, fast-moving investment bank in the Middle East market once activity has picked up in 18 to 36 months,” he said.
