Yudhoyono calls for quick end to Bank Danamon takeover

Move suggests possible political intervention in the high-profile takeover.

President Susilo Bambang Yudhoyono said he hoped the deal could be resolved in a “very short time” after being stalled for one year. The plan by Singapore’s DBS Group plan to acquire a 99% stake in Bank Danamon for US$6.8 billion was announced in April 2012.

“I hope it will move forward,” Yudhoyono said.

Bank Indonesia (BI), the banking regulator, however, is independent of the President by virtue of law. It set an ownership cap of 40% on local banks but has the power to make exemptions for banks with sound capital and healthy conditions.

The controversy surrounding the takeover bid has generated a political firestorm with BI Governor Darmin Nasution admitting the deal had turned political.

Indonesian lawmakers and local bankers have openly urged BI not to make any hasty decision out of fear of the overwhelming dominance of foreign lenders in Indonesia’s banking industry.

Analysts said BI is believed to be using the deal to assist Indonesian lenders expand in Singapore through reciprocal treatment. State-run Bank Mandiri and Bank Negara Indonesia, two of the top five banks, complain about the difficulties in expanding their business in Singapore despite the leniency given to foreign banks operating in Indonesia.