MUFG Expected to Begin Buying Danamon Stake Early Next Year

Updated on
  • Indonesia’s financial regulator sees first phase of deal soon
  • Japanese bank has expressed interest in buying Temasek’s stake

Indonesia’s financial regulator expects Mitsubishi UFJ Financial Group Inc. to begin accumulating a stake in PT Bank Danamon Indonesia early next year, as Japan’s biggest bank expands in the most populous Southeast Asian nation. 

MUFG will probably buy 40 percent of Danamon in two phases, the first of which may take place early in 2018, Aristiadi, head of foreign bank supervision at the regulator known as OJK, told a group of reporters in Jakarta on Wednesday. Danamon shares extended gains after the comments.

Tokyo-based MUFG has expressed interest in purchasing the shares from Singapore’s state investment firm Temasek Holdings Pte. The Japanese bank’s main lending unit is seeking to spend 200 billion yen ($1.8 billion) on the stake and may consider obtaining a majority holding in the future, the Nikkei newspaper reported last month. 

MUFG “will report to OJK and purchase a minority stake under the first phase early next year, without needing approval,” Aristiadi said. “If they want to buy 40 percent or more, they will need our approval as it needs to meet the test first."

Ownership Restriction

Indonesia largely restricts foreign banks from owning more than 40 percent of local lenders. OJK said last month that MUFG should consider merging its local unit with Danamon, citing the nation’s single-presence policy.

Asia Financial Indonesia Pte, which is owned by a Temasek unit, has a 67.4 percent stake in Danamon, according to the Indonesian bank’s 2016 annual report. Danamon said on Nov. 9 that it received notice from Asia Financial that it received an expression of interest in its holding. 

Temasek referred to Danamon’s statement and said it has nothing to add at this point. “In the event there is any transaction involving shares owned by us, appropriate disclosures will be made at that time,” Stephen Forshaw, a spokesman for the Singapore firm, said by email.

MUFG spokesman Jun Watanabe declined to comment.

Shares of Danamon rose 8.3 percent in Jakarta on Wednesday. The stock has climbed 15 percent since the close of trading on Nov. 8.

— With assistance by Gareth Allan, and Chanyaporn Chanjaroen

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