DBS Acquisition Danamon, Bank Urges Resiprokal

Bank Indonesia (BI) promises to realize the principle of reciprocity (equality) between Indonesia and Singapore banks. Regulators will use the acquisition of DBS Group Holdings to Bank Danamon as a bargaining tool. The hope, the Central Bank of Singapore loosening of licensing such as those enjoyed by Singapore-based bank in the country.

Indonesia's banking system is difficult to penetrate Singapore. For example, PT Bank Mandiri Tbk has yet to get permission to open branches. As with other foreign banks, Bank Mandiri is only allowed to open an office. In addition, the bank may not accept deposits from local residents and should not be installing an ATM. In Indonesia, Singapore-based bank is free to buy a local bank and open an outlet to the corners of the village.

The promise of BI is not separated from the protest a few bankers. They were amazed with the ease of Singapore-based bank in carrying out its strategy in Indonesia, while the national bank has never had a similar pleasure.

BI Governor Nasution confirmed about the protest. He admitted that he had talked with staff about things that will do the action of DBS Bank to address this. "I can not comment earlier because DBS has not been reported officially to the BI. For sure we will talk a lot with them," he said, Wednesday (04/04/2012).

BI Deputy Governor Muliaman Dharmansyah Hadad said he immediately sent a letter calling for DBS Group Holdings. BI will ask for an explanation of the plans and commitments at DBS Indonesia. "Calling is the usual procedure of the bank's new shareholders," he said.

Hadad said the transfer of shares of Bank Danamon to the owner of DBS Group Holdings create space communication by BI greater the Singapore regulator. Therefore, the BI can do cross border supervision (supervision of cross-country) because DBS is headquartered in Singapore. "We will also discuss further reciprocal with Singapore," he said.

The principle of reciprocity which would strive hard to achieve true BI. Therefore, the regulation of foreign banks in Indonesia are basically very loose. BI effort requires the central bank loosened the rules in other countries like shooting with blank bullets.

BI can indeed complicate or slow down the process of licensing of foreign banks that want to expand in Indonesia. However, the central bank may not prohibit, because then the BI means inconsistent with his own rules.

This condition is much different from Singapore or Malaysia that was beginning to have very strict rules. When prohibit foreign banks to open branches and ATMs, or raise funds from local residents, regulators in both countries rests on clear rules, not the unilateral judgment of central bank officials.

Thus, if you want to sue the principle of reciprocity, the BI is expected to ask other countries not limited to loosen the rules. BI must make an equally strict rules applied in other countries.