Singapore’s biggest bank by assets will push through with its planned US$7.3 billion acquisition of PT Bank Danamon Indonesia.
DBS Bank Ltd CEO Piyush Gupta said his bank will be “submitting a formal application at some stage” to proceed with the next steps in the proposed transaction. He did not indicate a date, however.
“We are working very closely with Bank Indonesia to make sure we have a good understanding of the rules and we will be guided by them on submitting a formal application,” Gupta said.
Analysts said DBS was likely to be in negotiations about how to structure the deal given that Bank Indonesia. the central bank, had indicated that investors would not be able to move to majority ownership immediately.
The acquisition was thrown into doubt shortly after it was unveiled in April when Indonesia rattled foreign investors by indicating it would cap foreign ownership of its banks at 40 % from the previous 90%.
Bank Indonesia said that while the 40% cap would apply, the threshold could be relaxed up to 80% if the acquiring bank was financially strong with a Tier One capital ratio of at least 6 %. DBS has a tier one capital ratio of 12.8%.
DBS planned to take full control of Danamon by buying a 67% stake in the bank owned by Temasek, Singapore’s sovereign wealth fund, for US$5 billion.
Danamon is Indonesia’s fifth largest bank with 3,000 branches and some six million customers.
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