B

ank Danamon (BDMN) may be merged with Bank DBS Indonesia if the Singapore DBS Group'€™s proposal to acquire the bank wins approval from Indonesia'€™s central bank, a Danamon executive said.

Danamon president director Henry Ho said in Jakarta on Thursday that if the acquisition plan was approved by Bank Indonesia (BI), Damanon would likely be merged with Bank DBS'€™ existing subsidiary, Bank DBS Indonesia.

The merger must comply with BI'€™s single-presence policy, which requires banks controlled by the same owner to be merged.

 '€œSo, the natural, logical thing to do is to merge the two banks. There will be no impact on the business because they will be complementary. It is a plus for everybody,'€ Ho said.

In April 2012, DBS, Southeast Asia'€™s largest bank by assets, announced that it planned to acquire a 99 percent stake in Danamon for US$6.8 billion, making it the region'€™s largest bank acquisition and turning Danamon into Indonesia'€™s fifth-largest lender.

DBS is controlled by Singapore state investment firm Temasek Holdings Pte. Ltd. Meanwhile, Danamon is currently 67.4 percent owned by Asia Financial (Indonesia) Pte. Ltd., which is also controlled by Temasek.

Danamon also expects DBS'€™ regional network and larger corporate banking business to be added to its own. On the other hand, Ho said, getting into Danamon would be good for the Singapore bank, citing Danamon'€™s strong focus on the mass consumer market business.

The acquisition is now pending approval from BI, the nation'€™s banking regulator. Previously, outgoing BI Governor Darmin Nasution said that it was processing the paperwork submitted by the DBS Group and remained in communication with Singapore'€™s central bank, the Monetary Authority of Singapore (MAS).

Danamon announced on Thursday that its net profits grew 11 percent to Rp 1 trillion (US$103 million) during the first quarter of this year compared with the same period in 2012. It attributed the growth to increases in mass market, small and medium enterprise (SME) and commercial lending segments.

 In the first quarter, total lending surged 11 percent to Rp 117 trillion. The mass market segment grew 8 percent to Rp 66 trillion, supported by automotive loans through subsidiary PT Adira Dinamika Multi Finance. Adira'€™s financing during the first three months, through March 2013, was up 6 percent to Rp 45 trillion.

Meanwile, Danamon'€™s SME segment increased 25 percent to Rp 18.6 trillion, and commercial lending rose by 23 percent to Rp 12.6 trillion. Danamon'€™s chief financial officer, Vera Eve Lim, said that its SME and commercial segments had exceeded the bank'€™s previous growth targets, set at 20 percent each.