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nvestors seemed to be showing their pessimism over Singapore-based DBS Group Holdings Ltd.'s plan to acquire Jakarta-listed PT Bank Danamon, with the latter's shares taking a dip on Wednesday.

Danamon's shares, traded under the code BDMN, were closed at Rp 5,850 (60 US cents) apiece on Wednesday, a 2.5 percent drop compared to a day earlier of Rp 6,000. The shares reached their lowest level on Wednesday at Rp 5,700 apiece, a 5 percent drop compared to the previous day's closing.

The drop likely resulted from Bank Indonesia's (BI) announcement the previous day that it had allowed Southeast Asia's largest lender to acquire only 40 percent of Danamon's shares.

In its US$6.8 billion acquisition plan, DBS agreed to pay about Rp 45.2 trillion ($4.6 billion) to Singapore's state-owned investment firm Temasek Holdings Pte. ' the largest shareholder in DBS with 29 percent ownership ' for the former's 67.4 percent stake in Danamon.

The Singaporean bank had also planned to buy Danamon's remaining shares from minority holders.

'Investors have been waiting for too long. It's even uncertain now whether DBS will keep going with the 40 percent acquisition as the amount can't consolidate Danamon financially,' said PT Valbury Asia Securities president director Johanes Soetikno.

'There are a number of our clients from Singapore selling their stake today [Wednesday] and many more willing to release [their shares],' Johanes added.

As many as 24.18 million Danamon shares were traded at a total of Rp 141.58 billion.

Also, a tender offer that DBS had planned to acquire Danamon's remaining shares was also uncertain.

'There is uncertainty over the tender offer on the remaining shares unless the Monetary Authority of Singapore [MAS] is more lenient in accommodating Indonesian banks' greater access in Singapore,' PT Mandiri Sekuritas said in a note.

BI said DBS could continue acquiring more than 40 percent of Danamon shares should the MAS be 'lenient' toward Indonesia's three state banks: PT Bank Mandiri, PT Bank Negara Indonesia (BNI) and PT Bank Rakyat Indonesia (BRI), on their aim to expand services to the city-state.

'DBS must also meet certain qualitative requirements such as BI's corporate governance and a fit and proper criteria,' Nomura's Julian Chua said in a note.

DBS said on Tuesday that it hoped its 'application would be approved as originally submitted and it would continue to be closely guided by Bank Indonesia'.

Separately, rating agency Fitch Ratings said BI's decision on the Danamon-DBS deal would temper other foreign banks to enter Indonesia.

'If there is a limited chance of ultimately gaining majority control, this may deter some long-term investors from looking to establish and build a local franchise,' Fitch said in a statement.

'Other investors may be less strategic and looking only for capital gains, so the ownership limitation may be less of a concern.'

Fitch said that an AA- rating for DBS's credit profile would unlikely be affected even if the Danamon acquisition deal fell through.

Meanwhile, if the deal is unsuccessful, Danamon's rating will remain at BB+ and Fitch will likely assign a stable outlook given the bank's high capitalization, reasonable earnings generation and asset quality in its high-yielding auto and microfinance businesses, as well as a modest deposit franchise.

Danamon reported an 11 percent growth in total lending to Rp 117 trillion in the first quarter of the year from the same period last year, with its mass market segment growing 8 percent, small and medium enterprise lending increasing by 25 percent and commercial lending rising 23 percent.