MUFG will have more stake in Bank Danamon Indonesia to 40%

Japan’s largest lender had laid out a plan to buy Danamon shares in three stages.

In the first stage, completed in December, MUFG bought 19.9 percent from Singapore state investor Temasek Holdings for Rp 15.875 trillion ($1.17 billion). At that price, Danamon was valued at around $6 billion.

The Japanese bank would then raise its stake to 40 percent and seek approval to hold at least 73.8 percent in Indonesia’s fifth-largest bank by offering to buy out other shareholders.

However, MUFG needs special permission from the OJK to take its holding above 40 percent – where foreign ownership of commercial banks is normally capped though exceptions are sometimes made.

MUFG did not immediately reply to requests for comment on Tuesday on whether the Japanese lender had been granted approval for a 73.8 percent stake. The OJK declined to comment.

If approved, this would mark a rare major purchase by an overseas lender in Indonesia’s banking sector after caps on foreign ownership of banks were introduced in 2012.

An MUFG official said in January that Bank Danamon would be merged with another Indonesian bank, Nusantara Parahyangan (BNP) after MUFG’s 40 percent stake was approved.

Danamon is the latest in a string of deals by the acquisitive MUFG, which already holds stakes in Vietnam’s Vietinbank, Thailand’s Bank of Ayudhya and Security Bank Corp of the Philippines.

Danamon’s shares rose 5 percent on Tuesday to Rp 6,575, giving it a market value of around $4.5 billion.