December 26, 2017 / 2:19 PM / in a year

Japan's MUFG seeks majority of Indonesia's Bank Danamon

TOKYO (Reuters) - Mitsubishi UFJ Financial Group (MUFG) (8306.T) said on Tuesday it agreed to buy 73.8 percent of Bank Danamon Indonesia (BDMN.JK), as it looks to build a foothold in Southeast Asia’s biggest economy.

FILE PHOTO: Japan's national flag is seen behind the logo of Mitsubishi UFJ Financial Group Inc (MUFG) at its bank branch in Tokyo, Japan September 5, 2017. REUTERS/Kim Kyung-Hoon

MUFG said it aimed to buy up to 100 percent in the lender, which would value the deal at over $6 billion, and had been in contact with Indonesian regulators.

In a statement, Japan’s largest lender said it planned to buy Danamon shares in three stages.

In the first, the Japanese bank will buy 19.9 percent from Singapore state investor Temasek Holdings [TEM.UL] for 15.875 trillion rupiah ($1.17 billion), a deal it expected to close within a few days.

MUFG will then raise the stake to 40 percent, pending regulatory approval, between the second and third quarters of 2018.

MUFG said after that, it sought approval to hold at least 73.8 percent in Indonesia’s fifth-largest bank by offering to buy out other shareholders in addition to acquiring shares from Temasek.

“We have long recognized Indonesia’s role as one of the key drivers of the region’s development and have sought to establish a stronger presence in the country,” Takayoshi Futae, MUFG’s CEO for Asia and Oceania region, said in a statement.

Danamon is the latest by a string of deals by highly acquisitive MUFG, which already holds stakes in Vietnam’s Vientinbank, Thailand’s Bank of Ayudhya (BAY.BK) and Security Bank Corp (SECB.PS) of the Philippines.

Japanese and other Asian banks are increasingly targeting a presence in Indonesia in hopes of tapping an emerging middle class in an economy with population of over 250 million.

South Korean Shinhan Bank acquired a majority stake in Bank Metro Ekspress in 2015, while China Construction Bank (601939.SS) entered the Indonesian market by acquiring Bank Windu in 2016.

Japan’s No. 2 bank, Sumitomo Mitsui Financial Group (SMFG) (8316.T), is keen to raise its stake to a majority in Indonesian lender BTPN (BTPN.JK) if authorities permit, its CEO told Reuters this week.

Reporting by Chris Thomas in Bengaluru; Editing by Sriraj Kalluvila and John Stonestreet

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