Indonesian central bank has approved DBS Group’s proposed acquisition of a strategic stake in Bank Danamon, as part of its $7.3bn bid to purchase the entire bank in an agreement originally signed in April 2012.
It is expected that following this regulatory approval, DBS will be allowed to buy 40% of Danamon, which is the initial limit for a bank acquisition as per Indonesian regulations.
On satisfying the central bank’s corporate-governance and financial-health standards, DBS would be allowed to acquire a majority stake in the bank in future.
Following the completion of the transaction, DBS would be able to gain a strong presence in the evolving Indonesian market, which remains underserved.
This offers significant market opportunities across banking products and customer segments, making Danamon’s universal banking platform well suited to tap into the Indonesian market.
As per the initial agreement, DBS will first purchase a 67.4% stake of Danamon held by the Singapore state-investment company Temasek Holdings, and after that it will acquire the remaining stake through a general offer.
If the transaction turns into reality, Danamon will be merged with PT Bank DBS Indonesia (DBS Indonesia), subject to receipt of requisite regulatory approvals.
DBS CEO Piyush Gupta said, "Danamon is a highly attractive franchise with an established platform, market leading positions and a very capable management team.
Headquartered in Singapore, DBS manages over 200 branches across 15 markets and serves nearly 4 million customers.