A joint venture agreement between EFG-Hermes, the leading Middle East investment bank, and QInvest of Qatar has collapsed because the regulator in Egypt did not give its approval in time.
Under the terms of the deal, QInvest would have injected $250m into a joint venture banking business, and owned 60 per cent.
In recent days, senior Egyptian officials had been quoted as saying that a decision on the deal would be announced before the expiry of the year-long deadline on May 3. But the two banks announced on Wednesday that “the long-stop date” for all conditions to be met to enable the deal to proceed had been reached without the Egyptian Financial Supervisory Authority granting the necessary regulatory approvals.
According to a person familiar with the deal: “It fell through because no one in Egypt now wants to make a decision or affix their signatures to a piece of paper.”
Businessmen in Egypt have complained that, since the 2011 revolution which ousted Hosni Mubarak as president, officials have shied away from making big decisions because of fears over possible allegations of corruption.
Analysts had also speculated that the failure of the regulator to approve the deal might be linked to the trial of the two chief executives of EFG-Hermes, alongside the two sons of the former president, over profits from the 2007 sale of El Watany Bank of Egypt.
However, the two executives have denied any wrongdoing and EFG-Hermes has said in the past that it did not believe the case had anything to do with the delay in approving the joint venture.
Angus Blair, director of the Signet Institute, a Cairo-based business and economics think tank, said: “The management was going to change after the joint-venture. If this were an issue, the regulator could have set conditions rather than stay silent.”
He added: “I find it incredibly disappointing that the regulator could not make up its mind.
“This is very sad news for Egypt as a financial centre.”
Identical statements issued by the two banks said that they had received regulatory approval in all the markets where the joint venture would work including Qatar, Saudi Arabia, the United Arab Emirates and Jordan.
They said they will now focus on “separately creating value for their shareholders” but would “remain open to pursue together suitable business opportunities in a less-structured framework”.
