August 3, 2018 / 7:26 AM / in 2 months

MUFG can expand Bank Danamon stake if it meets certain conditions- Indonesia regulator

JAKARTA (Reuters) - Indonesian regulators said Japanese lender Mitsubishi UFJ Financial Group Inc (MUFG) (8306.T) can expand its stake in PT Bank Danamon Tbk (BDMN.JK) to beyond 40 percent provided it meets certain provisions.

MUFG would be able to merge Bank Danamon with local peer PT Bank Nusantara Parahyangan Tbk (BBNP.JK), Indonesian Financial Services Authority (OJK)’s deputy commissioner for banking, Heru Kristyana, told Reuters on Friday.

“They (MUFG) can have a larger stake than 40 percent once the merger (with Bank Nusantara) has gone through and as long as they meet provisions and requirements,” he said in a message on WhatsApp, without giving further details on the provisions.

The Japanese lender needs special permission to take its holding beyond 40 percent as foreign ownership of commercial Indonesian banks has been capped at that level since 2012.

A spokesperson for MUFG said the bank had only received approval to increase its investment to 40 percent.

Bank Danamon and Bank Nusantara Parahyangan did not respond to requests for comment.

Japan’s biggest bank by assets in December said it was seeking a 73.8 percent stake in Bank Danamon, to build its presence in Southeast Asia’s biggest economy. It had laid out a plan to buy Danamon shares in three stages.

MUFG initially bought 19.9 percent of Bank Danamon from Singapore state investor Temasek Holdings (Private) Ltd [TEM.UL] for 15.875 trillion rupiah ($1.17 billion), valuing the Indonesian lender at around $6 billion.

On Tuesday, MUFG received regulatory nod to hike its holding to 40 percent through the purchase of a 20.1 percent stake from Danamon shareholder Asia Financial Holdings Ltd.

The final transaction would mark a rare exemption from caps on foreign ownership of Indonesian banks, as the regulator promotes consolidation among the country’s 100-plus lenders.

A successful MUFG-Danamon deal would also mark the biggest stake purchase of an Indonesian company by a foreign entity since Philip Morris International Inc (PM.N) bought 60 percent of HM Sampoerna in 2005 for $3 billion, Thomson Reuters data showed.

The Danamon purchase is the latest in a string of deals by MUFG. The bank’s other Southeast Asian holdings include stakes in Vietnam’s Vietinbank, Thailand’s Bank of Ayudhya PCL (BAY.BK) and the Philippines’ Security Bank Corp (SECB.PS).

Also on Friday, OJK said Japan’s second-biggest lender, Sumitomo Mitsui Financial Group Inc (SMFG) (8316.T), would merge its Indonesian branch with local lender PT Bank Tabungan Pensiunan Nasional Tbk (BTPN) (BTPN.JK).

SMFG and BTPN could not be reached for comment.

(This version of the story corrects to say MUFG can increase stake to beyond 40 percent if it meets some conditions, removes reference to approval for majority stake. Adds OJK quote and MUFG response)

Reporting by Cindy Silviana; Editing by Christopher Cushing

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