Investment banks take a big hit from regional unrest

The unrest, revolutions and civil war that have swept across the region in the past few months led to a 42 per cent slump in mergers and acquisitions to $4.9 billion, comparing the first quarter with the same months a year ago.

Equity issues have also been hit but debt capital markets have been stable, according to the Thomson Reuters investment banking league tables.

For equity investors hoping for good profit results from local banks in the first quarter this might come as a surprise. But they should know better.

Bahrain’s pain

Anybody watching the chaos in Bahrain, the regional banking centre, over the past few months can hardly be amazed that business has suffered. Indeed, the wonder is that any business has been done at all.

Goldman Sachs topped the widest ‘any Middle Eastern involvement M&A’ category as adviser to funds investing in Spanish energy and power targets with Abu Dhabi-based IPIC’s $7.4 billion in CEPSA and Qatar Holdings Luxembourg’s $2.7 billion investment in Iberdrola.

Middle Eastern equity issuance also declined during Q1, down 13 per cent year-on-year to $1.3 billion. Debt issues were more steady and declined two per cent to $5.5 billion over the same period.

Then again syndicated loans fell by 78 per cent to $2 billion with total fees slumping 58 per cent to $49 million. Clearly this is a tough time for investment banks in the Middle East.