DBS

DBS: Indonesia's central bank said it plans to cap single ownership in the country's banks at 40% for new investment, a rule that could scupper a US$7.3b bid by DBS for Bank Danamon. The proposal appeared to be aimed at stopping a DBS bid that has drawn nationalist opposition from local bankers and lawmakers, though it would ease concerns among other existing bank investors in the G-20 economy. The proposal would allow individuals or families to own only up to 30 per cent of local lenders, while financial institutions would be able to own up to a maximum of 40%. Add that this new regulation will only hold for new initiatives and new investment. Nomura note that without retroactive application, the new regulations appear very obviously aimed to scupper the DBS-Danamon deal and the chances of DBS walking away are now significantly above 50%. SG would be better off maintaining the status quo with Temasek holding on to its 67% stake.