MUFG seeking to buy 40 percent of Indonesia's Bank Danamon from Temasek - sources

By Taro Fuse and Anshuman Daga

TOKYO/SINGAPORE (Reuters) - The core unit of Mitsubishi UFJ Financial Group (MUFG) is looking to buy a 40 percent stake in Bank Danamon Indonesia for around 200 billion yen ($1.75 billion), a person familiar with the matter told Reuters on Thursday.

Bank of Tokyo-Mitsubishi UFJ (MUFG) intends to buy shares from Singapore's Temasek Holdings, a major shareholder, said the source and another person with direct knowledge of the matter, who declined to be named as the talks were not public.

Faced with sluggish growth at home, MUFG has expanded its presence in Southeast Asia in recent years, and holds stakes in Vietnam's Vientinbank, Thailand's Bank of Ayudhya and Security Bank Corp of the Philippines.

MUFG plans to invest in Indonesia's fifth-largest bank next fiscal year starting April 2018, and is aiming to reach a basic agreement this year, the first source said.

The bank is looking to take a majority stake in Bank Danamon in the future if it can win approval from Indonesia's central bank, the same source added.

Talks for the minority stake are in early stages and it is not certain the deal will be confirmed, the other source said.

A MUFG representative declined to comment, while Danamon and Temasek did not immediately respond to requests for comment.

Singapore's DBS Group Holding had sought to buy a controlling stake in Danamon from Temasek, but dropped the bid in 2013 after Indonesia changed regulations and restricted single ownership in domestic banks to 40 percent.

Indonesia can relax these curbs on special grounds, including if the investing bank is financially strong.

($1 = 114.0000 yen)

(Reporting by Taro Fuse in Tokyo and; Anshuman Daga in Singapore, additional reporting by Naomi Tajitsu; Editing by Himani Sarkar)