BI probes DBS' motive to buy Danamon shares

REPUBLIKA.CO.ID, JAKARTA – Bank Indonesia (BI) as Indonesian Central Bank, called out DBS Singapore over the acquisition on 67.37 percent of Danamon Bank share. BI seeks DBS’ motive and plan in buying Danamon shares considering that it already has DBS Indonesian Bank. The acquisition has a potency to breach single present policy (SPP) in Indonesia.

“I would like to now DBS’ intention and plan on Danamon’s case,” the Deputy Governor of BI, Muliaman D Hadad, said on Wednesday in Jakarta.

BI, Hadad said, would use old regulation, which is Governmental Regulation number 28/1999 on merger, consolidation, and acquisition of bank related to the acquisition of Danamon shares. Central bank will also ask for the banking authorization statement in Singapore to check the status of DBS Singapore.

“We will ask about DBS because we also have a communication with regulators or cross border supervision can be conducted,” he said.

Hadad also said that the acquisition would become an entrance for BI to talk on reciprocal regulation with Singapore authority on national bank planning to spread its wings to Singapore as many banks complained that national banking can hardly expand it business abroad. The meeting with the authority of Singapore financial supervisor is planned after BI meets DBS Singapore.

Dominating

DBS indirectly acquired Danamon after it dominating Asia Financial Indonesian Pte Ltd (AFI) share from Fullerton Financial Holding Pte Ltd (FFH) of 6.2 billion SGD. Danamon share is valued on 7,000 IDR per unit, soaring from the average price of company in a month on the market, which is on 4,480 IDR per unit.

Danamon share is bought with 56.3 percent of premium price. AFI was the owner of 67.37 percent of Danamon share. FFH is the subsidiary of Temasek Group and has 29 percent of DBS Singapore share.

The Analyst of Capital Market from Waterfront Securities, Oktavianus Marbun, said the acquisition of Danamon share only gave the benefit to Temasek. Although the margin of Danamon is increasing, the acquisition can breach SPP rule so that BI should take a step on conducting suspension of transaction.

The Analyst of Indopremier, Ikhsan Binarto, assumed the price bargained by DBS was equitable because the future prospect of Danamon share could reach 10,000 IDR per unit. Yet, BI and the Capital Market and Financial Institution Supervisory Board (Bapepam-LK) can investigate the legality of the purchase. "BI and Bapepam-LK can prohibit if it is proved to be wrong," he said.