TOKYO -- MUFG Bank announced Tuesday that equity-method affiliate Bank Danamon Indonesia will merge with an Indonesian group lender as part of a plan to turn the former into a wholly owned subsidiary.
Danamon, Indonesia's fifth largest commercial bank 40% owned by MUFG, will be the surviving entity after the integration with Bank Nusantara Parahyangan, which is owned 67.59% by Mitsubishi UFJ Financial Group's consumer finance unit Acom.
MUFG will then seek to raise its stake in Danamon to a maximum of 100% in March or April, pending approval from authorities.
MUFG has gradually increased its ownership of Bank Danamon, with total investment now expected to reach 690 billion yen ($6.3 billion). That figure is around halfway between the roughly 500 billion yen it spent on acquiring Thailand's Bank of Ayudhya and an investment of about 900 billion yen in Morgan Stanley of the U.S.
After the merger, Bank Danamon will focus on retail and small business customers, while MUFG Bank's Jakarta branch will serve large corporate customers.