Indonesia could set banking ownership stake limits at 30-40pct

25-May-2012 Intellasia | Fox Business | 7:01 AM Print This Post

Indonesia will likely set limits on ownership of local banks by any single financial institution at 40 percent, and non-financial institutions at 30 percent, Bisnis Indonesia reported Wednesday, citing an unnamed source at Bank Indonesia.

Ownership by multiple owners from the same family would be limited to 20 percent, the newspaper reported.

The daily said a decision on the new limits, which would apply to foreign and local owners alike, could be made this week.

Bank Indonesia declined to comment on the report.

Single stakes in banks are currently limited to 99 percent, and there is no distinction made between financial and non-financial institutions. The central bank has been considering a change to the rules since last year.

The prospect of new limits, which could force foreign and local investors alike to reduce their holdings in some of Indonesia’s largest banks, has cast a cloud over the acquisition of PT Bank Danamon (BDMN.JK), Indonesia’s sixth largest bank by assets, by Singapore’s DBS Group Holdings (D05.SG).

DBS moved to acquire Danamon in early April for $7.3 billion, but has since been awaiting word of the new ownership limits.

The central bank has said it would not start processing DBS’s bid until after the ownership rule is decided. If allowed to proceed, the deal would be the largest ever acquisition in Indonesia.


Category: Indonesia

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