DBS/Danamon: Singapore & Indonesia - FT.com If bank regulators played high stakes poker - and who knows, perhaps they do - then the conversation between Indonesia and Singapore around the green baize would have gone something like this: "I'll see your money for our bank - and I'll raise you access for ours to your market." Indonesia's central bank has finally approved DBS taking a stake in Bank Danamon. However, it will only allow DBS the control it wants if Singapore opens up to Indonesian banks, just two of which operate there, and with one branch apiece. But who wants to sit and watch regulators gamble? DBS's plan, announced in April last year, was to offer shares worth $5bn for the 67 per cent of Danamon held by Temasek, Singapore's state investor, which also owns 29 per cent of DBS. DBS would extend the offer to other Danamon shareholders. Market reaction implied DBS's investors were on board. Control of the number five bank in the world's fourth most populous country is one thing. But a chunky minority stake in an unpredictable situation is very different. Still, Indonesia is an increasingly important market and DBS's own presence is small. So it can take the 40 per cent and hope for more, assuming also it can renegotiate with Temasek given the smaller stake and its one-quarter share price gain since the deal was first agreed. Technically, Bank Indonesia allows bank buyers to proceed beyond 40 per cent after a period for it to observe governance and do other checks. Bank Indonesia wants its myriad banks to consolidate. Linking takeover approval so closely with regulatory politics will do it no favours. But that does not solve DBS's dilemma. The bank has long traded at a roughly one-fifth discount to its Singaporean rivals" price to book ratios. As long as the Danamon issue lurks, that will not change. Of course, DBS could join this poker game and call Indonesia's bluff by walking away.