DBS Danamon Bid Will Proceed Under Bank Indonesia Ruling: Fitch

Rishaad Salamat & Sanat Vallikappen

DBS Group Holdings’$7 billion bid for Bank Danamon Indonesia will probably go through under new bank ownership rules in Southeast Asia’s largest economy, according to Fitch Ratings.

“They’ve taken a fairly pragmatic approach with respect to regulations on ownership,” Mark Young, head of the Asia-Pacific Financial Institutions group at Fitch Ratings, said in a Bloomberg Television interview in Singapore.

“There’s no reason to suggest that the Danamon deal will not go through” and the new rules give “sufficient flexibility.”

Bank Indonesia, the central bank, said last week that it would restrict banks’ ownership of local lenders to 40 percent, granting exemptions if the acquirer met certain criteria in areas such as corporate governance and financial strength. DBS, Southeast Asia’s largest lender, offered on April 2 to buy 67 percent of Danamon from Singapore’s state-owned investment company, Temasek Holdings, as well as equity held by minority shareholders, for Rp 66 trillion ($7 billion).

“As the regulations have just been issued, we will review them carefully,” Karen Ngui, a Singapore-based spokeswoman for DBS, said in an e-mail. “We will continue to work closely with Bank Indonesia on next steps.”

Elsewhere in the region, Malaysia’s Bank Negara limits collective foreign ownership of banks to 30 percent and may grant exemptions based on the investor’s qualifications and the national interest. In Singapore, where DBS is based, any buyer must get government approval before crossing ownership thresholds of 5 percent, 12 percent and 20 percent.

Bloomberg