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[SINGAPORE, JAKARTA] DBS has denied market rumours that its Indonesian banking subsidiary could be merged with Indonesia’s Bank Central Asia (BCA), after shares of the Indonesian lender jumped amid talk of a potential deal.

“There is no truth to this rumour,” a DBS spokesperson told The Business Times. BT has also reached out to BCA for comment, but has not received a response at the time of writing.

Shares of BCA, one of Indonesia’s largest banks listed on the Indonesia Stock Exchange, surged more than 7 per cent on Wednesday to close at 5,275 rupiah.

As at noon on Thursday, it retreated to 5,025 rupiah while DBS shares inched lower, down S$0.02 or 0.03 per cent at S$73.93.

There was speculation that DBS Indonesia could be merged with BCA through a non-cash deal, in which DBS would receive newly issued BCA shares in exchange for its 99 per cent stake in DBS Indonesia. BCA owns the remaining 1 per cent.

Under the rumoured deal, BCA would remain the main entity, while DBS would become a shareholder in BCA.

DBS Indonesia has total assets of 164.83 trillion rupiah (US$9.1 billion) as Aug 31, 2026, up 10.9 per cent from a year earlier, according to its latest monthly financial statements.

For the eight months ended August, the bank posted a net profit of 1.27 trillion rupiah, down 1.4 per cent year on year.

Potential benefits

While DBS has denied the merger rumours, analysts said a combination of its Indonesian operations with BCA could bring potential benefits even as they remain cautious about the financial gains and feasibility of such a deal.

“Strategically, I can see the rationale,” said Ricky Ho, chief investment officer of Four Capital.

He pointed out that DBS Indonesia has an established corporate banking, treasury, wealth management and institutional client franchise, which could complement BCA’s “exceptionally strong” domestic deposit franchise, payments ecosystem and retail distribution network.

“Combining the two could create opportunities in corporate lending, transaction banking, cross-border financing, wealth management and fee-based income.”

However, Ho noted that the financial contribution would be relatively modest, and “struggles” to see how this transaction alone would fundamentally transform BCA’s earnings trajectory or justify a substantial valuation re-rating.

Muhammad Nurkholis Syafruddin, an analyst at Mirae Asset Sekuritas, said BCA’s significant valuation decline amid uncertainty over MSCI’s proposal to downgrade Indonesia to Standalone Market status could, in theory, make the bank more attractive to strategic investors.

“However, any potential acquisition would depend on several factors, including shareholder willingness, financing capacity and regulatory approval,” he said.

BCA is Indonesia’s largest private-sector bank by assets, with total assets of 1,641 trillion rupiah as at September 2026. Dwimuria, the investment holding arm of Djarum Group, remains BCA’s controlling shareholder with a 54.94 per cent stake.

BCA’s valuation has come under significant pressure this year, with its shares falling around 35 per cent year to date as at late-October, amid broader market volatility, foreign investor outflows and concerns over Indonesia’s potential reclassification by MSCI, bringing its market capitalisation down to about 648 trillion rupiah.

DBS’ previous acquisition attempts

DBS has previously been linked to potential acquisitions in Indonesia.

In 2025, media reports identified DBS and Malaysia’s CIMB as frontrunners to acquire a controlling stake in Indonesia’s Panin Bank.

However, it was reported that neither bank ultimately submitted a binding bid because they could not meet the sellers’ price expectations.

DBS had also pursued a major acquisition in Indonesia in April 2012, when it agreed to acquire a 67.37 per cent stake in Bank Danamon for about S$6.2 billion.

The deal ultimately fell through in August 2013 after Indonesia’s central bank approved an initial acquisition of only up to 40 per cent, with additional ownership subject to further regulatory considerations, including reciprocal market access for Indonesian banks in Singapore.

The failed transaction highlights the complexity of cross-border banking acquisitions, where commercial attractiveness alone may be insufficient to ensure completion, according to a report by Mirae.

Against this backdrop, Four Capital’s Ho said that any assessment of the rumoured transaction would hinge on its structure and valuation, with key considerations including the share-exchange ratio, the number of new shares and whether the deal would be earnings-accretive after dilution.

BCA’s return on equity, capital adequacy and cost-to-income ratio would also be important factors, he added.

A more fundamental question, Ho noted, would be the rationale for DBS to give up direct control of its Indonesian banking operations for a minority stake in BCA.

He added that an appropriately priced transaction could make sense for both parties, particularly if DBS values exposure to BCA’s franchise more highly than maintaining direct control of its Indonesian subsidiary.

“But without knowing the proposed valuation, ownership structure, expected synergies and strategic intentions of both shareholders, I would not automatically interpret the rumour as bullish for BCA,” said Ho.

“A good acquisition is not simply about acquiring a profitable business. It is about acquiring that business at a price that creates value for existing shareholders.”