(Aug 15): Oversea-Chinese Banking Corp. is weighing a bid for Standard Chartered Plc’s Indonesian bank, people with knowledge of the matter said, a move that may create the country’s fifth-largest lender. OCBC shares fell.

The Singaporean bank is considering an offer for almost 90% of PT Bank Permata, which has a market value of about US$1.9 billion ($2.6 billion), said the people, asking not to be named as the deliberations are private. OCBC is interested in the stakes held equally by Standard Chartered and PT Astra International, the people said.

Buying Permata would add to OCBC’s presence in Southeast Asia’s largest economy, where it already owns about 85% of Bank OCBC NISP, according to data compiled by Bloomberg. Under Indonesia’s single-presence rule, the two banks may have to merge, although regulators recently signaled intentions to relax that requirement.

Speculation that OCBC is getting ready for another acquisition has been fueled by its less generous dividend policy when compared with Singapore’s two other major banks. Permata and Bank OCBC NISP have combined assets of 326 trillion rupiah ($31.7 billion), the fifth highest in Indonesia, data compiled by Bloomberg show.

Shares of OCBC fell as much as 3% on Thursday morning in Singapore, more than the benchmark Straits Times Index’s 1.9% decline.

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London-based Standard Chartered said in February that its Permata investment is no longer considered core, signaling it may be getting ready to sell the stake. It also named Indonesia among four countries where the bank is focused on reducing costs and engineering a long-awaited turnaround.

Standard Chartered and Jakarta-listed Astra each own about 44.6% of Permata, data compiled by Bloomberg show.

OCBC’s deliberations are still at an early stage and may not result in a deal, the people said. Representatives for OCBC, Bank Permata, Astra and Standard Chartered declined to comment.

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OCBC has also been looking at expanding its presence in China. Chief Executive Officer Samuel Tsien said in April he will look at increasing the bank’s 20% ownership of China’s Bank of Ningbo Co. once regulators allow foreign banks to hold larger stake in local lenders.

Acquiring Permata would probably be a better deal, according to Bloomberg Intelligence analyst Diksha Gera. Buying the Indonesian lender at current prices would be “more accretive” than raising its stake in Bank of Ningbo at a “significant premium,” she wrote in a note.

Permata reported net income of 711.4 billion rupiah for the first half of this year, up from 288.8 billion rupiah a year earlier.

OCBC purchased Wing Hang Bank in Hong Kong for US$5 billion in 2014, and in 2016 it paid US$227.5 million for the wealth assets of Barclays Plc in Singapore and Hong Kong.

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