Largest bank takeover in Asia goes sour

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DBS

The largest bank deal in Asia is not going to happen. DBS, Singapore’s largest bank by assets, said on July 31 that it would walk away from a planned $7.2 billion acquisition of a controlling stake in Indonesia’s Bank Danamon after the Indonesian bank regulator ruled that not more than 40 per cent of the stake can be bought.

DBS originally wanted to buy 76.4 per cent in Bank Danamon from Singapore’s state investment firm Temasek Holdings and had hoped to get a waiver for the new regulation. However, the regulator decided otherwise in a move that is largely seen as politically motivated and could deter other investors in the country.

After the abandoned deal was announced, shares of DBS rose 2.6 per cent while Bank Danamon’s saw the biggest decline in 4.5 years. However, it may take about 5 more years to expand its own operations in Indonesia to match Danamon’s $400 million in profit, DBS said.

Indonesian banks are currently the most profitable in the world’s 20 biggest economies, data compiled by Bloomberg show. Banks with a market value of at least $5 billion boast an average net interest margin of 6.6 per cent, while Singapore bank margins are below 2 per cent.

 

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Reading Time: 1 minute

Reading Time: 1 minute

DBS

The largest bank deal in Asia is not going to happen. DBS, Singapore’s largest bank by assets, said on July 31 that it would walk away from a planned $7.2 billion acquisition of a controlling stake in Indonesia’s Bank Danamon after the Indonesian bank regulator ruled that not more than 40 per cent of the stake can be bought.

DBS originally wanted to buy 76.4 per cent in Bank Danamon from Singapore’s state investment firm Temasek Holdings and had hoped to get a waiver for the new regulation. However, the regulator decided otherwise in a move that is largely seen as politically motivated and could deter other investors in the country.

After the abandoned deal was announced, shares of DBS rose 2.6 per cent while Bank Danamon’s saw the biggest decline in 4.5 years. However, it may take about 5 more years to expand its own operations in Indonesia to match Danamon’s $400 million in profit, DBS said.

Indonesian banks are currently the most profitable in the world’s 20 biggest economies, data compiled by Bloomberg show. Banks with a market value of at least $5 billion boast an average net interest margin of 6.6 per cent, while Singapore bank margins are below 2 per cent.

 

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