TOKYO/SINGAPORE (Reuters): Mitsubishi UFJ Financial Group (MUFG) is in talks to buy a 40% stake in Bank Danamon Indonesia for around 200 billion yen ($2.4 billion), a person with direct knowledge of the talks told Reuters on Thursday.

MUFG, through its core unit Bank of Tokyo-Mitsubishi UFJ, intends to buy Danamon shares from Singapore state investor Temasek Holdings, a major shareholder, said two sources, 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 already 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 in the financial year starting April 2018, and is aiming to reach a basic agreement this year, the first source said.

“The company is strategically considering various investment opportunities in Indonesia,” an MUFG representative said, adding that domestic media reports on plans for a Danamon stake were not based on any announcement made by the company.

Temasek declined to comment, while an official at the Indonesian Financial Services Authority said there had not been “any submission from MUFG to own or enter Bank Danamon”.

Danamon, however, said its controlling shareholder had received an “expression of interest” related to its shareholding in the company, but no deal had been confirmed.

“We understand that this interest depends on further negotiations ... It is not definite that the transaction will be implemented,” said Rita Mirasari, Danamon’s corporate secretary.

Shares of the Indonesian bank rose as much as 19% to a three-month high, after news of the possible stake sale that, according to estimates from Mandiri Sekuritas, values the stock at 61.5 cents apiece or 28% above Wednesday’s close.

“We believe the market’s euphoria will not last long and expect the share price to be adjusted,” analysts at Mandiri wrote in a report.

Danamon lends primarily to the retail and corporate sectors and is a major private player in microfinance. Singapore’s DBS Group Holdings had sought to buy a controlling stake in Danamon in 2013, but dropped the bid after Indonesia changed laws to restrict single ownership in banks to 40%.

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

Temasek, one of the world’s biggest investors, currently owns about 68% in Danamon.

MUFG has future plans to seek a majority stake in Danamon if it gets regulatory approval, the first source said.

The Indonesian banking sector has attracted several deals over the past few years, as Asian lenders look to get a foothold in the world’s fourth-most populous nation.