Thailand’s Bangkok Bank announced it would buy a majority stake worth $2.7 billion in Standard Chartered’s Indonesian lender Bank Permata, signalling the massive potential of Southeast Asia’s most populous country.

The acquisition comes as major Japanese and other East Asian banks are scrambling to integrate Indonesian lenders into their business.

Permata bank, whose major shareholders were Standard Chartered and Indonesian conglomerate PT Astra, is Indonesia’s 12th biggest bank and has more than three million customers.

Bangkok Bank said Thursday it had entered a “conditional share purchase agreement” to acquire an 89.12 percent stake in Permata, worth $2.7 billion.

The transaction is expected to close within 2020, after which it plans to acquire the remaining 10.88 percent.

This would bring the total value “to $2.9 billion for 100 percent”, said Chansak Fuangfu, executive director at Bangkok Bank.

As Thailand’s economy slows to single-digit growth in the next few years, the Thai lender hopes Permata will boost its opportunities.

“It is a win-win solution for both parties,” Chansak said during a press conference announcing the “landmark transaction”.

Another Bangkok Bank executive director Charamporn Jotikasthira said Indonesia was a key focus in their plan for growth because of its “favourable demographics”.

One of the region’s largest commercial banks, Bangkok Bank had been competing with Japan’s Sumitomo Mitsui Financial Group for the majority stake in Permata, according to Bloomberg.

On Thursday, Permata shares were up more than 4 percent in Jakarta.

Meanwhile, Bangkok Bank shares fell more than 4.4 percent and were trading at 161.50 baht by the end of the day.

Chansak downplayed the drop as the current “sentiment of the market,” saying it was too early to tell if there was a real negative impact.

“It is only the first day – we would have to see long term,” he said.

While Indonesia is the world’s fourth most populous nation, many Indonesians remain outside the traditional banking system, making it a race for lenders to reach consumers in Southeast Asia’s largest economy.

– AFP