Asian banks lucrative expansions into Indonesia
(10 May 2013 – Indonesia) Sumitomo Mitsui Financial Group (SMFG) has agreed to buy a 40 percent stake in Indonesia’s PT Bank Tabungan Pensiunan Nasional (BTPN) for a total of US$1.5 billion (A$1.4 billion).
This agreement is the Japanese lender’s largest purchase of a foreign firm to date.
Japan’s three biggest banks, including Mitsubishi UFJ Financial Group Inc. and Mizuho Financial Group Inc., are accelerating overseas takeovers as deflation discourages borrowing at home.
Indonesia is the most lucrative market for loans among the world’s 20 biggest economies, while Japan is the least profitable in Asia, data compiled by Bloomberg show.
The Japanese bank is buying the 24.3 percent stake from 8 May to 10 May for 9.2 trillion rupiah (A$945 million), it said in the statement.
SMFG plans to purchase an additional 15.7 percent from TPG later, subject to regulatory approval.
The 40 percent stake will cost about 150 billion yen (A$1.4 billion), said Sohei Nishimaki, a Tokyo-based spokesman at Sumitomo Mitsui.
"BTPN has a unique business model and offers a wide range of services focusing on the mass market," Sumitomo Mitsui said in the statement.
Indonesia "is expected to record rapid and sustainable growth driven by its large population" and expanding middle class, it added.
Banks such as DBS Group Holdings Ltd are looking to expand in Indonesia as its households gain spending power.
The country’s central bank has said it plans to rule this month on Singapore-based DBS’s proposed US$6.8 billion takeover of PT Bank Danamon Indonesia.
Indonesian banks have the best loan profitability among the world’s 20 biggest economies, based on the 7.3 percent average net interest margin of lenders with a market value of more than USA$5 billion, data compiled by Bloomberg show.