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Mena investment banking fees surge past $1bn for year so far

Dubai Creek Harbour Creative Commons/Dinitrophenol
Esplanade at Dubai Creek Harbour, one of the top 10 deals of the year so far
  • Fees hit $1.05bn in first nine months of 2022, a year-on-year rise of 5%
  • Bullish fee generation in Gulf contrasts with global gloom, says Refinitiv
  • First Abu Dhabi, the UAE’s biggest bank, is 5th in ranking with $37.8m

JP Morgan and HSBC remain the top fee-earning investment banks in the Middle East and North Africa, a new report has found, although a further slowdown in mergers and acquisitions could help regional banks boost their share. 

Total investment banking fees in the Mena amounted to $1.05 billion in the first nine months of 2022, up 5 percent year-on-year, according to Refinitiv’s Mena Investment Banking Review

JP Morgan retained its position as the leading fee earner in the region with $84.3 million in the first nine months of 2022. This was down 16 percent year-on-year, however, and the New York-based bank’s share of total fees fell 2 percentage points to 8 percent. 

British lender HSBC earned $65 million to keep second place, despite also suffering a 2-point decline in its share of total fees. American giant Goldman Sachs soared to third from seventh having netted $54.5 million in fees. 

Source: Mena Investment Banking Review, Refinitiv

JP Morgan chairman and CEO Jamie Dimon, HSBC CEO Noel Quinn and Goldman chairman and CEO David M. Solomon will all speak at Saudi Arabia’s Future Investment Initiative summit on Tuesday, underlining the Middle East’s importance to their global operations. 

Citi was in fourth place with $52.3 million, while First Abu Dhabi, the UAE’s biggest bank, was fifth with $37.8 million. Standard Chartered, whose CEO Bill Winters is also speaking at the Saudi summit, slumped to sixth from third with $37.2 million. Barclays’ fees of $36.6 million propelled the British bank to seventh from 32nd place.

Banks’ bullish fee generation in the Mena contrasts with a 32 percent decline globally. Fees in Europe dropped 35 percent to $16.5 billion and those from the Americas fell 39 percent to $40 billion, according to Refinitiv. 

Source: Mena Investment Banking Review, Refinitiv

“Europe and the Americas enjoyed bumper post-pandemic growth in investment banking fees, so this year’s steep declines come from a very high level,” said Lucille Jones, deals intelligence analyst at Refinitiv. “Fees in the Middle East have been growing for the past 10-12 years.”

The surge in Mena fees comes amid a steady flow of M&A deals involving regional entities as either buyers or sellers. The number of such deals rose 5 percent to an all-time high of nearly 900, although their combined value of $69.7 billion was down 17 percent on the prior-year period. 

“There have been high levels of both domestic and outbound M&A activity,” said Jones.

“Inbound deals have declined from a value perspective, but the deal count was still very strong and the second highest on record.”

M&A deal volumes include both announced and completed deals, whereas fee income covers completed deals because it is usually only then that the banks get paid. That means there is a lag between a deal announcement and the fees being logged in Refinitiv’s database.

“As deal volumes have declined in the past two quarters, I’d expect M&A fees to also fall in the coming quarters based on current dealmaking levels,” Jones added.

Of the Mena fees, $339.6 million came from M&A, $377.7 million from loans, $284.4 million from equity transactions and $52.4 million from debt sales. 

Source: Mena Investment Banking Review, Refinitiv

Fewer M&A deals will boost the relative importance of equity and debt-related fees, for which the likes of Dubai’s Emirates NBD, First Abu Dhabi and Saudi National Bank claim a sizeable chunk of regional business. 

“Regional banks tend to be much higher in the equity and debt rankings than the M&A league table – international banks dominate when it comes to M&A advisory,” said Jones. 

“As M&A activity slows, international banks could see their share of total Mena investment banking fees decline with a shrinking M&A fee pool.”

Total nine-month Mena fees were the highest since 2008, although nearly half of these earnings came in the first quarter alone, which was the second-highest quarterly total on record. Third-quarter fees slumped to $186.4 million, the lowest quarterly total in six years. 

“Mena fees are on a downward trajectory, but while the global economic outlook is pretty gloomy, expectations for the Middle East are more positive and that should make the region more attractive to investors seeking growth,” said Jones.

Mena nine-month equity and equity-related fundraising totalled $15.3 billion, up from $5.8 billion a year earlier, as 29 regional companies completed initial public offerings worth a combined $13.2 billion. 

HSBC ranked first in this chart, having been involved in 18.5 percent of this fundraising. Saudi National Bank was second with 10.6 percent and Egypt’s EFG Hermes third with 9.1 percent. First Abu Dhabi (7.7 percent) and the Saudi trio of Riyad Bank (6.4 percent), GIB Capital (3.2 percent) and Al Rajhi Capital (2.4 percent) also made the top 10. 

Refinitiv compiles its data based on public information, plus proprietary data submitted by the banks themselves. “They are very keen to contribute their data, so these rankings are clearly important to them,” added Jones. “Banks like to feature in these league tables, and they use them in their pitches to potential clients.”

Top 10 M&A deals with Mena involvement this year so far

5DP World-UAE AssetsUAEIndustrialsCDPQPending
4.4VodafoneUKTelecomsAtlas 2022Completed
2.7Abu Dhabi National Energy CoUAEEnergyInvestor groupPending
2.7VGP HoldingsUSIndustrialsGateway Velocity Pending
2.3NMC HealthcareUAEHealthcareCreditorsCompleted
2.1Grupo NutresaColombiaConsumer staplesIHC Capital HoldingIntended
2.1InetumFranceTechnologyInvestor groupCompleted
2.0Dubai Creek HarbourUAEReal estateEmaar PropertiesPending
1.7Reem InvestmentsUAEFinancialsQ HoldingCompleted
1.5Kingdom Holding CompanyS ArabiaFinancialsPIFCompleted

Source: Mena Investment Banking Review, Refinitiv

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