Japan's Mitsubishi UFJ Financial Group plans to buy a 51 percent stake in Thailand's Bank of Ayudhya for about 400 billion yen ($4.1 billion) in a bid to expand its business in Southeast Asia, a report said on Saturday.
By turning Thailand's fifth-largest commercial bank into a subsidiary, MUFG aims to offer a wide range of financial services to consumers and businesses in Thailand, the business daily Nikkei said.
This will mark the first time that a Japanese bank takes direct control of a major bank in the rest of Asia.
To date, Japanese banks have focused their operations there largely on lending to Japanese companies and helping them with trade settlement, Nikkei said.
MUFG will first buy out GE Capital's entire 25 percent stake in the Thai bank, a person close to the discussions told Dow Jones.
It will then launch a tender off for the remaining shares, but seek to keep the other big shareholder, Thailand's Ratanarak family which holds 22 percent, as a partner, the Down Jones report said.
The Japanese financial group could forge a formal agreement early next month.
Bank of Ayudhya has a market capitalisation of about $6.1 billion. Under a typical buyout scenario in which a premium over the stock price is offered, MUFG stands to pay 400 billion yen or so, making this the largest acquisition on record in Asia by a Japanese bank, the Nikkei said.
Even on an international scale, the deal is among the biggest by a Japanese bank since MUFG announced its investment, worth about 900 billion yen, in Morgan Stanley in 2008, it added.
Established by the Ratanarak family, which runs a television broadcaster, Bank of Ayudhya holds around 3.4 trillion yen in assets.
The bank handles personal loans and credit cards and is strong in transactions with small and medium-sized businesses.
MUFG's lending balance, already the largest in Thailand for a foreign bank, is expected to shoot up 350 percent through the Bank of Ayudhya acquisition.
Since Thailand bars foreign banks with local branches from providing capital to its banks, MUFG plans to merge its Bangkok branch with Bank of Ayudhya, the report said.
The Japanese financial group will strengthen Asian operations by applying know-how cultivated from turning US lender Union Bank into a wholly owned subsidiary back in 2008, the report said.
About 4,000 Japanese companies operate in Thailand, a major export base that is home to a burgeoning middle class.