MUFG said it aimed to buy up to 100% in the lender, which would value the deal at over US$6 billion, and had been in contact with Indonesian regulators.
In a statement, Japan’s largest lender said it planned to buy Danamon shares in three stages.
In the first, the Japanese bank will buy 19.9% from Singapore state investor Temasek Holdings for 15.875 trillion rupiah (US$1.17 billion), a deal it expected to close within a few days.
MUFG will then raise the stake to 40%, pending regulatory approval, between the second and third quarters of 2018.
MUFG said after that, it sought approval to hold at least 73.8% in Indonesia’s fifth-largest bank by offering to buy out other shareholders in addition to acquiring shares from Temasek.
”We have long recognized Indonesia’s role as one of the key drivers of the region’s development and have sought to establish a stronger presence in the country,” Takayoshi Futae, MUFG’s CEO for Asia and Oceania region, said in a statement.
Danamon is the latest by a string of deals by highly acquisitive MUFG, which already holds stakes in Vietnam’s Vientinbank, Thailand’s Bank of Ayudhya and Security Bank Corp of the Philippines.
Japanese and other Asian banks are increasingly targeting a presence in Indonesia in hopes of tapping an emerging middle class in an economy with population of over 250 million.
South Korean Shinhan Bank acquired a majority stake in Bank Metro Ekspress in 2015, while China Construction Bank entered the Indonesian market by acquiring Bank Windu in 2016.
Japan’s No. 2 bank, Sumitomo Mitsui Financial Group (SMFG), is keen to raise its stake to a majority in Indonesian lender BTPN if authorities permit, its CEO told Reuters this week.