Bank Tabungan Pensiunan Nasional (BTPN), an Indonesian lender, has received a proposal from Japan’s Sumitomo Mitsui Banking Corp (SMBC) to merge with its local unit PT Bank Sumitomo Nasional (SMBCI).

The proposal by the SMBC, which is also the biggest shareholder of BTPN, underscores Japanese lenders’ interest in the Indonesian financial services industry.

As a result, BTPN will start an independent formal valuation phase prior to its planned merger with SMBCI.

BTPN secretary and compliance director Anika Faisal said the new name and time frame for the proposed merger is still needed to be discussed with shareholders.

A change in the composition of shareholders is also possible; however, it all depends on the valuation outcome, she added.

SMBC holds a 40% stake in BTPN, Summit Global Capital Management owns another 20%, while private equity firm TPG Nusantara owns 8.4% stake.

BTPN is a mid-sized bank that concentrates serving on small businesses and individuals.