Bank Danamon shareholders approve merger plan

MERGER - JAKARTA. The shareholders of publicly listed private lender PT Bank Danamon have agreed to merge the bank with Bandung-based PT Bank Nusantara Parahyangan (BNP) in a move initiated by the parent company of the two banks -- Japan-based MUFG Bank Ltd.

According to an official statement on Tuesday, the shareholders voiced their approval during a general shareholders meeting in Jakarta to discuss a proposal of a merger to form a bank of the BUKU II category, which has core capital between Rp 1 trillion (US$70.46 million) and Rp 5 trillion. 

MUFG Bank merged the two banks to get a strong foothold in Indonesia, as the merger will increase its stake in Bank Danamon. It is also aimed to comply with a Financial Services Authority (OJK) rule that foreign banks can only have one subsidiary in the country.

Generally, foreign investors are limited to a maximum stake of 40 percent in a local bank, but the OJK allows them to have more than that, so long as the deal involves buying two lenders and merging them.

MUFG currently holds 40 percent of Bank Danamon, while it also holds 7.91 percent of BNP’s share through direct ownership and 67.59 percent through a subsidiary, consumer loan company ACOM Co Ltd.

The merger would increase MUFG's ownership of Bank Danamon to 73.48 percent.

The move is to be implemented in the near future, as OJK executive head of banking supervision Heru Kristiyana said the authority had given the green light to the plan. "We've given our permission," he told The Jakarta Post.