Bank Indonesia deputy Governor Muliaman Hadad yesterday said healthy banks may be allowed to purchase stakes greater than 40 per cent in local banks, higher than previously expected, under new rules to limit ownership by single entities. He said the new rules would be released “soon”.
Hadad’s comments could bode well for DBS’ $7.3 billion (S$9.4 billion) bid to acquire a majority stake in Indonesia’s sixth-largest bank, Bank Danamon.
The deal, which would be the largest acquisition in Indonesia if approved, has been on ice since April with the central bank considering stake limitations. Bank Indonesia has for the past year been discussing new stake limits in a bid to improve corporate oversight by ensuring banks have multiple owners.
Indonesia currently allows single stakes of up to 99 per cent – far higher than Singapore and Malaysia – but has recently intimated that the new rules would limit stakes to a maximum of 40 per cent.
Hadad also said stakes for existing banks could be linked to corporate governance ratings, suggesting that highly ranked banks may be able to continue operations without divesting from their current levels.
He said the central bank would continue to explore reciprocity among countries when it comes to ownership in the banking sector.
Some lawmakers have urged the central bank to reject DBS’ bid on concerns that Indonesian banks are not given similar market access by Singapore’s authorities.