DBS / Bank Danamon

DBS / Bank Danamon: Acquisition appears on track again, after Bank Indonesia said it has issued new bank ownership rules. The rules, which apply to foreigners and Indonesians alike, limit new single-investor acquisitions to 40% for financial institutions, 30% for non-financial institutions, and 20% for families or individuals. The limit is 25% for individuals and families if the target is an Islamic bank. In specific cases however banks will be allowed to purchase more than 40% of a domestic commercial bank provided they can maintain high levels of corporate governance and financial health over 3 consecutive rating periods within the five yrs of their initial stake purchase. We note that the new rules may pave the way for Singapore's DBS to buy a majority share of Bank Danamon, Indonesia's sixth-largest lender by assets. The $7.3b deal, announced early April, would be the largest acquisition in Indo. Bank Danamon CEO note that that the new rules offered a "positive sign" for the deal.