Jakarta. Mitsubishi UFJ Financial Group said it was cautiously optimistic of gaining regulatory approval for its plans to take majority control of Bank Danamon Indonesia — a deal that sent shares in the Southeast Asian lender surging.
Japan's biggest lender, eager to expand its presence in Indonesia, has agreed with Temasek, Singapore's state investment arm, to buy 73.8 percent of the bank in three stages.
The first part of the acquisition — a purchase of a 19.9 percent stake worth $1.2 billion — is due to be completed within days. Eventually it aims to buy all the shares in the country's seventh-largest bank by asset.
Any purchase of a stake of 40 percent or more will, however, exceed the maximum allowed by Indonesia's financial services regulator OJK, although the watchdog has the power to grant exceptions.
Takayoshi Futae, MUFG's chief executive for Asia and Oceania, told a news conference that the Japanese bank was in continuous discussions with OJK and was "cautiously optimistic" it would gain approval to take more than 40 percent. He did not elaborate further.
Danamon's shares jumped 15 percent in Wednesday trade to Rp 6,900 apiece. At one point they climbed as high as Rp 7,000 — their highest level in more than 17 years — although that was still below the Rp 8,323 per share agreed with Temasek.
The second phase of the acquisition — a purchase of a 20.1 percent stake — is expected to be completed in the second or third quarter of 2018, MUFG said.
OJK has previously granted an exception to the 40 percent rule as part of its efforts to promote consolidation in the sector, allowing China Construction Bank Corp (CCB) to buy a controlling stake in Bank Windu Kentjana International in 2015 which then merged with another small domestic bank.