MUFG Can Expand Bank Danamon Stake if It Meets Certain Conditions: OJK


AUGUST 03, 2018

[Corrected on Saturday, Aug. 4, to say MUFG can increase its stake to beyond 40 percent if it meets some conditions, removes reference to approval for majority stake. Adds OJK quote and MUFG response.]

Jakarta. The Financial Services Authority, or OJK, said Japanese lender Mitsubishi UFJ Financial Group can expand its stake in Bank Danamon to beyond 40 percent, provided that it meets certain provisions.

MUFG would be able to merge Bank Danamon with local peer Bank Nusantara Parahyangan, the OJK's deputy commissioner for banking, Heru Kristyana, told Reuters on Friday (03/08).

"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 the shares in three stages.

MUFG initially bought 19.9 percent of Bank Danamon from Singapore state investor Temasek Holdings for Rp 15.875 trillion ($1.17 billion), valuing the Indonesian lender at around $6 billion.

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

The final transaction would mark a rare exemption from caps on foreign ownership of Indonesian banks, as the OJK 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 bought 60 percent of HM Sampoerna for $3 billion in 2005, 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 and the Philippines' Security Bank Corp.

Also on Friday, the OJK said Japan's second-biggest lender, Sumitomo Mitsui Financial Group (SMFG), would merge its Indonesian branch with local lender Bank Tabungan Pensiunan Nasional (BTPN).

SMFG and BTPN could not be reached for comment.