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Another extension for DBS takeover of Temasek

Another extension for DBS takeover of Temasek

(4 June 2013 – Indonesia) Southeast Asia’s biggest bank, DBS Group Holdings Ltd has agreed to extend the deadline for buying a controlling stake in PT Bank Danamon Indonesia from Temasek Holdings Ptd, amid regulatory squabbling.

The agreement with Temasek’s Fullerton Financial Holdings Pte, will be prolonged to 1 August, Singapore-based DBS said in a statement today. The deal will lapse unless both parties agree to a further extension, it said.

Indonesia’s former central bank Governor Darmin Nasution said in May that DBS will be allowed to take 40 percent of Danamon, in accordance with bank ownership rules set after the 66.4 trillion-rupiah (A$7.07 billion) takeover bid was made in April last year.

A minority stake would deny DBS management control as it seeks a foothold in a country where loans are the most profitable among the world’s 20 largest economies.

Indonesia’s regulator is leveraging the transaction to gain equal access in Singapore for its banks, possibly thwarting what would be Southeast Asia’s largest bank acquisition.

While a minority stake in Danamon would cut DBS’s reliance on Singapore, Southeast Asia’s least profitable loan market, Indonesian bank ownership laws unveiled last July can bar the bank from achieving its original plan to gain full control.

The new rules allow ownership by another lender to rise above 40 percent only if certain conditions, including capital strength requirements are met.

"DBS will make further announcements when there are significant developments on the transaction," it said in Monday’s statement.

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