Temasek says DBS Group remains key asset

Temasek says DBS Group remains key asset

Dow Jones, Singapore

Temasek Holdings Pte. Ltd. Wednesday said DBS Group Holdings
Ltd. remains one of the state-owned investment company's key
assets, in its first comments after an analyst report questioned
whether Temasek still considered Southeast Asia's largest lender
a core holding.

"DBS is a key financial institution within the stable of
Temasek-linked companies, and a long-term investment into the
economic prospects of Singapore and Hong Kong, as major business
hubs of Asia," said Temasek in response to queries from Dow
Jones.

The Singapore government's investment arm didn't comment on
ING Financial Market's report that recent developments suggest it
may sell out of DBS. The agency did, however, confirm that a
Temasek-Deutsche Bank AG venture has raised its stake in
Indonesia's PT Bank Danamon Indonesia to 62 percent from 51
percent.

It also reiterated that the Danamon investment is a reflection
of Temasek's "confidence in the recovery and potential of the
Indonesian economy, and an opportunity to participate in its
growth."

"Temasek believes in Asia's potential. Investments into Asian
financial institutions represent our interest to participate in
and contribute to Asia's growth and success, within an acceptable
risk-return framework," it said in a statement.

Temasek is an agency through which the Singapore government
has since 1974 maintained a sizable role in Singapore's economy.
It controls some of the region's largest companies such as a 29
percent stake in DBS, port operator PSA Corp. and Singapore
Airlines Ltd.

In a bid to expand its presence in Indonesia, Temasek recently
bid with South Korea's Kookmin Bank for 51 percent of Indonesia's
sixth-largest bank, PT Bank Internasional Indonesia.

"We will continue to seek out interesting opportunities in
this sector," Temasek told Dow Jones.

The debate about Temasek's intentions with regards to DBS
began earlier this week after ING said an unidentifed senior
Temasek official told the investment bank that Temasek's plan to
build a regional banking presence remains intact, but that
"shockingly, DBS is no longer considered a part of this plan."
The report raised questions about whether the government may, in
fact, sell out of DBS.

DBS has bought banks in Thailand, Hong Kong and the
Philippines since 1998, moves that are seen as a key part of a
government-inspired drive to externalize the Singapore economy.

Analysts have suggested that the recent government move to
consolidate its stake in Temasek from other agencies could also
be a prelude to a stake sale or merger between DBS and a regional
lender.

DBS isn't aware of Temasek's plans for its bank stake,
spokeswoman Catherine Ong told Dow Jones separately.

"At the time of the (share) transfer, Temasek said it was for
administrative reasons and it didn't signal a strategic change in
its shareholding," she said.

Ong also sought to address market talk that DBS may acquire
Temasek's stake in Bank Danamon, following recent reports that
DBS and Bank Danamon now have a deal to share their automated
teller machines.

"We have been working with Bank Danamon before Temasek took a
stake in it in June. We are doing all these commercial tie-ups
with Danamon independently of what Temasek is doing with
Danamon," Ong said.

"There's nothing on the agenda for us to take over Temasek's
stake in Danamon. Whether that will happen in five years' time, I
don't know."

DBS Managing Director Rajan Raju was recently appointed to
Bank Danamon's board of directors, but Ong said Raju was
appointed as an independent director and isn't a DBS nominee.

DBS continues to look at growth opportunities in Indonesia,
Thailand and India, but Ong declined to say if the lender is
looking into any particular banks in the region.

Despite Temasek's interest in Bank Danamon, ratings agency
Standard & Poor's has said the Indonesian lender has one of the
worst business and financial profiles among Temasek-linked
companies.