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Daily Dispatches – DBS dumps Danamon deal

Banks beat forecasts

Banks beat forecasts

Bloomberg reports that DBS Group Holdings has killed plans to buy PT Bank Danamon Indonesia for USD$6.5 billion. Had it gone through, it would have been the region’s largest banking takeover. The acquisition was called off after DBS failed to secure Indonesia’s regulatory approval for a majority stake.

The agreement to acquire control from Temasek Holdings Pte’s Fullerton Financial Holdings unit will lapse after today’s deadline, Singapore-based DBS announced yesterday. South-east Asia’s largest bank made an offer in April to buy 99% of Danamon for USD$6.5 billion.

The acquisition fell foul of Indonesia’s new bank ownership rules that limited DBS to buying a 40% stake.

Sounding the warning

Bloomberg says that Chinese banks’ profits may decline in the next three years as a government crackdown on industrial overcapacity slows lending and sours loans, according to an interview with JPMorgan Securities (Asia Pacific).

HSBC’s Josh Klaczek, head of Asia financial services, said credit growth may slow to the mid-teens over the next 18 months, from the 20-25% gains in recent years.

“Growth and profits would be increasingly challenged,” Klaczek said. “Given the pressures we are seeing right now in terms of asset quality, in terms of slower revenue growth versus rising costs, and then on top of that potential interest rate liberalisation, that’s a recipe for earnings falling.”

Trading up

Reuters reports that one of the world’s largest banks, ICBC of China, is in advanced talks to buy South Africa’s Standard Bank’s markets business in London for more than USD$500 million. 

Sources told Reuters that the prospective purchase by Industrial and Commercial Bank of China would also include Johannesburg-based Standard Bank’s currency and interest rate operations in London as well as raw materials trading including copper and aluminum.

Standard Bank, which is 20% owned by ICBC, has been hiving off its operations outside Africa to focus on fast-growing sub-Saharan markets on the continent.

SAC saga widens to India

The Wall Street Journal reports that the founder of an Indian online shopping website has been charged in the US. with giving inside information about a partnership between Microsoft and Yahoo to a trader for one of Wall Street’s most successful hedge fund firms, SAC Capital Advisors LP.

Sandeep Aggarwal, founder of Gurgaon-based ShopClues.com, was arrested by the FBA in California on Monday. Aggarwal was alleged to have tipped a trader at SAC Capital with confidential information about the Microsoft and Yahoo partnership ahead of a July 2009 public announcement.

The Washington-based market regulator Securities & Exchange Commission alleged that the trader used this information to buy large amounts of Yahoo stock for SAC and his personal account.

 

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