Temasek Looks to Merge BII, Danamon

Singapore’s state-owned investment company, Temasek Holdings Pte, may merge its two Indonesian banks into the country's fifth largest to meet ownership rules and boost their competitiveness, Bloomberg News reported on Friday (14/9/07).

PT Bank Internasional Indonesia (BII) will hire advisers to draft a recommendation for the merger, president director Henry Ho said Wednesday in an interview. The proposal to combine with PT Bank Danamon will be submitted to the central bank within this year, he said.

”Prima facie, it does seem to make sense but it needs to be validated,” Ho said, adding that the two Jakarta-based banks complement each other.

A merger would create a bank with Rp135 trillion ($14 billion) in assets and 730 branches. There had been earlier reports, denied by the bank, that it was looking to sell its stake in BII.

A merger would also help Temasek, which manages more than $100 billion of assets, meet Indonesian rules restricting control of more than one financial services company. The central bank is introducing a ‘one presence policy’ in which entities may hold significant shares in more than one bank.
Temasek needs to sell its stake in one of the two banks, merge them or put them under a holding company, according to central bank regulations. Ho ruled out forming a holding company. Temasek said it's leaving the decision to the two banks.

A group led by Temasek owns 56.2% of BII and a majority stake in another group that owns 68.4% of Danamon, Bloomberg noted.
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