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DBS Group Holdings Ltd. (DBS)’s $7.2 billion bid for PT Bank Danamon Indonesia won’t be approved until the country sets new ownership rules and agrees with Singapore on reciprocity in treatment of lenders.
Bank Indonesia will process the bid for the country’s sixth-largest lender after reaching an agreement with the Monetary Authority of Singapore, where DBS is based, Governor Darmin Nasution said in Jakarta today. The new rules on ownership of financial institutions in Southeast Asia’s largest economy will be finished by June at the latest, he said.
Indonesian officials have expressed reservations about DBS’s bid, the largest by a Southeast Asian lender, since it was announced on April 2. Deputy Finance Minister Mahendra Siregar voiced concern last week that Danamon as a national institution would be lost.
“We talked with the Monetary Authority of Singapore about this in Washington and we told them that we can’t process it now as we have to wait until the new regulation comes out,” Nasution said. “We also talked about reciprocity. The regulation isn’t meant to hamper foreign investors but it’s meant for us to be more prudent.”
Karen Ngui, a Singapore-based spokeswoman at DBS, declined to comment on Nasution’s remarks.
DBS climbed 2 percent to S$13.99 as of 4:20 p.m. in Singapore, set for the biggest gain in a month, after posting a 16 percent gain in first-quarter profit that beat analyst estimates. Danamon lost 3.2 percent to 6,100 rupiah, the most since Feb. 24.
“All foreign banks are free to expand their activities in Singapore subject to the guidelines specific to the license under which they operate,” the Monetary Authority said in an e- mailed response to queries on April 9, adding today that its views remain the same. Four Indonesian lenders have a presence in the city, it added.
DBS, whose biggest shareholder is Singapore’s state-owned Temasek Holdings Pte, offered to pay Danamon’s parent company 45.2 trillion rupiah ($4.9 billion) in new shares for its 67 percent stake and buy the remaining stock for 21.2 trillion rupiah in cash. Temasek will increase its stake in DBS to 40.4 percent from 29.5 percent, the lender said.
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