Indonesia to Weigh Approval for Bank Stakes Exceeding 40%
Indonesia’s central bank said it will consider letting banks own more than 40 percent of local lenders under new rules that may allow DBS Group Holdings Ltd. (DBS) to proceed with its $7 billion PT Bank Danamon Indonesia (BDMN) bid.
Banks that want to own more than the threshold set by July 13 regulations may seek approval if they are publicly traded and meet capital requirements, according to a statement posted on Bank Indonesia’s website. Foreign banks would need recommendations from their local regulator.
Shares of DBS, Southeast Asia’s largest lender, gained to the highest since before its April 2 offer to buy a 67 percent stake in Danamon from Temasek Holdings Pte as well as equity held by minority shareholders. Concern that Indonesia, Southeast Asia’s biggest economy, may tighten ownership limits had led some traders to bet that the transaction could unravel.
“The new rules will pave the way for DBS to buy Danamon,” said Tjandra Lienandjaja, an analyst at PT BNP Paribas Securities Indonesia. “There are exemptions” to the 40 percent limit, “which we view as positive.”
DBS, in which Singapore’s state-owned investment company Temasek has a controlling 29.5 percent stake, said it will pay its biggest shareholder 45.2 trillion rupiah ($4.9 billion) in new shares for the 67 percent stake in Danamon. DBS also plans to buy the remaining stock for 21.2 trillion rupiah in the region’s largest banking takeover.
Shares Rally
Shares of DBS climbed 1.1 percent to S$14.49, the highest since March 21, as of 2:02 p.m. in Singapore, where the benchmark Straits Times Index rose 0.3 percent. Danamon gained 1.6 percent to 6,300 rupiah, the highest since April 27, at the mid-day trading break in Jakarta.
DBS will review the new rules and will “continue to work closely” with Bank Indonesia, said Karen Ngui, a spokeswoman for the lender.
An owner exceeding the 40 percent limit must have a Tier 1 capital ratio of at least 6 percent and be committed to owning the bank for a “certain period of time,” according to the regulations signed by Bank Indonesia Governor Darmin Nasution on July 13. Within five years from an acquisition, at least 20 percent of the target bank’s shares must be publicly traded.
Corporate Governance
The ruling “seems to apply only to new acquisitions” because existing banks will be exempt if they meet the Indonesian central bank’s minimum corporate governance and financial health requirements, Keith Wee, a Kuala Lumpur-based analyst at OSK Research Sdn., said in a note to clients.
Oversea-Chinese Banking Corp. owns 85.06 percent of PT Bank OCBC NISP, according to an e-mail from the Singapore-based lender, and Malayan Banking Bhd. (MAY) has a 95 percent stake in PT Bank Internasional Indonesia, according to the Malaysian lender’s website. Qatar National Bank SAQ holds 69.59 percent of PT Bank Kesawan, and Standard Chartered Plc owns 45 percent of PT Bank Permata, data complied by Bloomberg show.
Non-financial companies may own as much as 30 percent of Indonesian lenders and individuals may hold 20 percent, according to the regulations.
To contact the reporters on this story: Sanat Vallikappen in Singapore at vallikappen@bloomberg.net; Novrida Manurung in Jakarta at nmanurung@bloomberg.net
To contact the editors responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net; Greg Ahlstrand at gahlstrand@bloomberg.net
Indonesian Central Bank Governor Darmin Nasution
Dimas Ardian/Bloomberg
Darmin Nasution, Bank Indonesia governor.
Darmin Nasution, Bank Indonesia governor. Photographer: Dimas Ardian/Bloomberg
April 30 (Bloomberg) -- DBS Group Holdings Ltd. Chief Executive Officer Piyush Gupta talks about the company's financial performance, growth strategy and business in China. DBS, the lender that offered to buy PT Bank Danamon Indonesia for $7.2 billion, posted first-quarter profit that unexpectedly climbed 16 percent to a record on higher income from interest and trading. He spoke on April 27 with Bloomberg's Haslinda Amin. (Source: Bloomberg)
April 2 (Bloomberg) -- DBS Group Holdings Ltd. Chairman Peter Seah speaks about the company's planned purchase of PT Bank Danamon Indonesia. DBS offered to buy Bank Danamon for about $7.2 billion, the biggest takeover by a Southeast Asian lender, to tap a market growing at the fastest pace since before the 1997 Asian crisis. Seah spoke with Bloomberg's Sanat Vallikappen in Singapore. (Excerpt. Source: Bloomberg)
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