UOB to buy stake in Bank Buana

The second of Singapore''s big three banks looks to invest in the Indonesian banking sector.

UOB yesterday announced that it had entered into an exclusive arrangement to conduct due diligence with a view to acquiring a 23% stake in Bank Buana Indonesia. The curious announcement makes no mention of any price agreed and has caused analysts to wonder what is going on. Officials at UOB would not comment further.

The 23% stake is worth some Rp804 billion $94 million at the current market price of Rp700 a share for Bank Buana. However, shares in Bank Buana have gone up 40% since Friday as the market got wind of this transaction.

Importantly, if the deal were struck at today's price it would represent a valuation of about...

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