Egypt’s Financial Supervisory Authority (EFSA) has stopped the merger between investment bank EFG-Hermes and Qatar’s QInvest. The deal which was approved by EFG shareholders in June, was suspended due to inability of the investment bank to make clarifications on a number of issues as required by the regulatory authority.

In a report issued by the authority through the state news agency, Ashraf El-Sharkawy, the head said: “The Authority approved the (shareholder) assembly in form but refused it in terms of content, procedures and decisions.”

According to reports, EFG failed to make clarifications on the fate of minority rights after the deal fell through. Therefore, it is expected that EFG will provide the required information and re-convene a shareholders’ meeting to complete laid down procedures for the deal.

In May this year, EFG announced merger plans with QInvest to form a region-wide investment bank. According to reports,  the deal, when approved, would see state-backed investment outfit, QInvest  hold  60 percent stake while EFG-Hermes will control the remaining 40 percent in the new venture – EFG Hermes Qatar.

EFG is the biggest home-grown investment bank in the Middle East but has been enveloped by economic turmoil as a result of the popular uprising in Egypt. This has greatly impeded the bank’s spread across the Middle East causing it to seek partnership with the energy-rich Qatari company to get access to more resources to aid its expansion plans.

The deal went well until Planet IB, an investors’ group backed by Egyptian billionaire Naguib Sawiris attempted to buy-out EFG, but was strongly rebuffed by the bank’s management.

Had EFG accepted Planet IB’s buy-out offer, the consortium would have paid at least 13.50 Egyptian pounds ($2.23) per share for EFG, a minimum net value of $1.1 billion.