BANGKOK -- Kasikornbank, Thailand's fourth-largest bank by assets, said Monday that it will buy a 9.99% stake in Bank Maspion Indonesia, the listed banking arm of midsize Indonesian conglomerate Maspion Group for $20 million.
The deal will give Kasikornbank access to a country where many Thai companies are active investors.
Kasikornbank lags regional peers from in Singapore and Malaysia when it comes to venturing into other Southeast Asian markets.
This is the Thai bank's first investment in Indonesia. At present, it has only a representative office in the country and cannot provide loans or other banking services. It aims to upgrade the office to a branch, but Predee Daochai, Kasikornbank's president, told reporters on Monday that he was not sure whether that would happen in the next three to five years.
"So we decided to take a step forward by becoming a shareholder of Maspion bank," he said, adding that the stake could rise in the future. "This alliance will allow us to work closely with a local bank and learn about the market and its customers."
Boasting the largest population and gross domestic product in ASEAN, Indonesia is an attractive market for Thai companies.
Indonesia is Thailand's second-largest recipient of foreign direct investment in the world. Bilateral trade between the two countries reached $16 billion in 2016 and is forecast to grow to $20 billion by 2020, according to Kasikornbank.
Major Thai investors in Indonesia include oil company PTT and industrial conglomerate Siam Cement. But when it comes to banks, Thailand is a minor player. Bangkok Bank, the largest bank in Thailand, is the only one with a branch in the country.
"Our target is to be in all 10 ASEAN countries," Predee said. The bank currently has branches in Laos and Cambodia and representative offices in Myanmar, Vietnam and Indonesia. "The Maspion investment highlights a big move toward completing the big picture."
Bank Maspion ranks around 80th by assets among the 120 or so banks in Indonesia. Kasikornbank's clients will be able to draw on its 50-branch network.
Alim Markus, president director and chief executive of Maspion Group, told reporters on Monday that Bank Maspion is counting on Kasikornbank's expertise in digital banking and trade finance. He said that Bank Maspion aims to be among the country's top three banks in the next 30 years.
Maspion Group is based in Surabaya, the country's second-largest city, and is involved in a range of businesses from kitchenware to home appliance manufacturing.
On Monday, Kasikornbank shares closed up 1.3% while Bank Maspion climbed more than 5%.
Nikkei staff writer Wataru Suzuki in Jakarta contributed to this report.