www.thejakartapost.com - Regulators may use DBS Bank's bid for Indonesia's Bank Danamon as a bargaining chip and delay approval until Singapore agrees to offer reciprocal access to its banking sector.
Bank Indonesia (BI) governor Darmin Nasution and his deputy Muliaman Hadad said on Wednesday that they wanted to use DBS' bid to acquire the Indonesian bank, in which Temasek Holdings has a majority stake, to start negotiations on the matter.
If it goes through, the $9.1 billion acquisition, DBS' largest ever, will propel the Singapore bank to being the No. 5 lender in Indonesia, one of the hottest emerging markets. (source)
Currently, BNI is the only Indonesian bank with a full banking licence in Singapore. Several banks, including Indonesia's biggest bank, Bank Mandiri, have been complaining about barriers to entry in Singapore.
'Indonesian state-controlled banks have had so much difficulty even in opening one ATM in Singapore,' Indonesian Democratic Party-Struggle MP Maruarar Sirait, a member of the parliamentary commission overseeing banking, told The Straits Times on Thursday.
'Meanwhile, Singaporean banks are operating so freely in Indonesia, penetrating far-flung areas, doing small loans.'
'We respect Singaporean banks here, but do they respect our banks there? If they don't, we should give them the same treatment,' he said.
These rumblings come amid rising economic nationalism that continues to worry foreign investors.
Over the past decade, Singaporean and Malaysian banks have expanded rapidly in Indonesia, drawn by the country's booming economy.
Yet, Indonesian banks have found it hard to expand regionally.
While the four large state-owned Indonesian banks still control over a third of banking assets in the country, foreign-owned banks are catching up.
Even those who said they did not anticipate a problem with the acquisition - as Danamon is effectively foreign-owned anyway - are saying enough is enough.
Going forward, 'we have to have a ruling to limit foreign shareholding in banks operating here', said Democrat Party MP Achsanul Qosasi, a deputy chairman of the banking commission.
He noted though that such a rule should not be retroactively applied.
The history of foreign owners with stakes in local Indonesian banks has been a chequered one, with rules changing from time to time. Still, long-term investors say the risks are worth it.
A central bank policy introduced several years ago to limit each foreign owner to one bank saw Temasek Holdings sell its stake in Bank Internasional Indonesia (BII) to Maybank in 2008.
Several analysts noted that Indonesia was forced to open up its banking sector after the 1997 Asian financial crisis as it needed capital. It was unrealistic, they said, to expect other countries to do the same without similar pressure.
'What does it have to do with this (deal)?' said equity analyst Edwin Sinaga. 'It is up to each country to have its policy.'
'Let's not turn everything into politics.'
Another Indonesian analyst with a foreign firm, however, said: 'The central bank can decide anything because it has the authority to supervise all banks operating in Indonesia.
'Investors can't complain if the central bank blocks the transaction and Danamon share prices drop. That is the risk of investing.'
But for all their objections, central bank officials and MPs acknowledge that they do not have any legal basis to hold up the deal.
Still, that is not going to stop them from delaying it, if and while they can.
Source: http://www.thejakartapost.com/news/2012/04/06/dbs-may-see-danamon-bid-delayed.html - April 6, 2012
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