Japan's MUFG seeking to complete takeover of Indonesian lender Danamon

23, Jan. 2019

TOKYO, NNA – Japanese lender Mitsubishi UFJ Financial Group, Inc. is seeking to inch closer to completing what could be the largest takeover of an Indonesian company, by merging two local banks in which it invests through two separate MUFG group firms.

The group said Tuesday that PT Bank Danamon, in which MUFG Bank, Ltd. holds a 40 percent stake, will merge with PT Bank Nusantara Parahyangan, which is owned 67.59 percent by the MUFG group’s consumer lender, Acom Co.

It is a part of the group’s plan to establish a firm footing in Southeast Asia’s biggest economy, by turning the merged entity into a majority-owned subsidiary. Bank Danamon will be the surviving entity after the integration.

In December 2017, Japan’s largest lender announced a plan to buy Danamon shares in three stages.

It now plans to raise its stake in Danamon to over 73.8 percent by around April 2019, pending approval from the Indonesian authorities.

MUFG needs special permission from the Indonesian Financial Services Authority (OJK) to increase its holding above 40 percent, which is considered the upper limit on foreign ownership of commercial banks in Indonesia.

The Japanese banking group wishes to fully control the Indonesian lender. A spokesperson for MUFG Bank said the total investment would reach 700 billion yen ($6.4 billion) if MUFG were to take a 100 percent stake in Bank Danamon.

Bank Danamon hailed the latest move.

"MUFG is one of the world’s largest financial groups, and we believe that MUFG’s investment in Bank Danamon will add value to our customers and franchise, and help us continue to grow as a leading bank in Indonesia,” Danamon said in a statement issued Tuesday.

“We will be able to tap into MUFG’s strengths, expertise and network to facilitate Bank Danamon’s growth and delivery of long-term value to all stakeholders.”

Bank Danamon also said that by taking advantage of the strengthened capital partnership, it and MUFG Bank would seek to achieve collaboration and synergy in such areas as retail banking, digital innovation, risk management and financing of the auto supply chain.