Indonesia will issue new rules on bank ownership next month that may jeopardize a US$7.3 billion (RM22 billion) bid by Singapore's DBS Group to buy a local lender, the latest policy shift to worry investors.
Indonesia's central bank first proposed rules to cap bank ownership last year and temporarily barred takeovers in the sector before the DBS bid to buy Bank Danamon this month stoked nationalist opposition by anxious local rivals.
The bank said it will review plans to acquire all of Danamon after the new rules are issued in late May.
The takeover, if allowed, will be Indonesia's largest foreign takeover and Asia's fourth-biggest banking deal.
"This will have a negative impact in the short term on Indonesian banking stocks as well as M&A (merger and acquisition) deals in that sector," said Winston Sual, chief executive of Jakarta-based PT Panin Asset Management.
Central bank governor Darmin Nasution said the rules will still allow investors to have majority ownership in Indonesian banks. Indonesia currently allows foreigners to own up to 99 per cent.
The central bank previously said it wants equal access for Indonesian lenders to expand in Singapore and getting that will be a factor in its decision on whether to approve the DBS move to buy Danamon from Singapore state investor Temasek.
Some Indonesian bankers have said they would try to block the DBS deal and were considering a media campaign targeting public opinion in the hope of influencing politicians. source: BTimes