The changing of the guard at QInvest is not good news for job security

The merger between QInvest and EFG Hermes was posited as an opportunity to create a true regional investment banking powerhouse in Qatar. However, so far it’s resulting in an internal power struggle that is forcing out senior executives and eliminating jobs.

Last week the bank confirmed the departure of chief executive Shahzad Shahbaz, a 25-year veteran of Bank of America and former CEO of Emirates NBD’s investment bank. He was replaced by Tamim Al-Kuwari, who joined last month from Goldman Sachs’ Qatar operation, initially as deputy CEO.

Now, other senior executives have departed – the heads of investment banking, financial institutions and structured finance, placement and wealth management, corporate services and risk management and compliance have all departed, according to Reuters.

According to a statement from QInvest, the main driver of these changes was Al-Kuwari who: “Evaluated the current situation and identified means and channels to increase effectiveness and efficiency while maintaining the bank’s strategic direction, business activities, meeting clients’ requirements and closing the JV with EFG-Hermes which is pending regulatory approval. Therefore, jobs have been eliminated and colleagues have left the firm.”

The changing of the guard, particularly in the investment bank, is not hugely surprising. The joint venture between EFG Hermes and Qinvest, where the latter holds 60% of the venture, was heralded as an opportunity to create the largest investment bank in the region. However, part of the reason that QInvest was so interested in EFG Hermes was because of the advisory expertise it could acquire.

"The thinking was that the EFG guys would come in and with their experience handle most of the divisions but the deal is yet to get clearance from the Egypt regulator and given the political situation there, things may turn tricky," a senior banking source told Reuters.

EFG Hermes appears to be holding up well in a difficult environment. In the third quarter of this year, investment banking revenue at EFG Hermes rose by 18% year-on-year, to E£176m (AEDF105m) on the back of stronger capital markets and treasury activity, and has declined by just 1% for the first nine months of 2012.

It also still employs 917 people within its investment bank (down from 988 at the same point in 2011), compared with just 135 across all of QInvest’s offices. Integrating this without eliminating further jobs, will be a significant challenge for Al-Kuwari and more redundancies are likely in the coming months.

Already, there’s evidence of how the merger has affected job security. QInvest cut as many as 13 jobs within its brokerage and asset management divisions in October. This month, however, EFG Hermes has said that it’s planning on adding a range of products to its asset management division as soon as the joint venture is tied up, and will increase assets under management by nearly 50% to $5bn.