Tokyo. Japan's Sumitomo Mitsui Banking Corp (SMBC) is buying 35 percent stakes in two Indonesian vehicle financing firms for about 40 billion yen ($333 million), sources with direct knowledge of the matter said, betting on rising incomes in the Southeast Asian nation boosting vehicle ownership.

SMBC is buying a 35.1 percent stake each in Oto Multiartha and Summit Oto Finance, auto and motorbike finance companies owned wholly by Japanese trading house Sumitomo, the sources told Reuters on Friday. The sources declined to be identified before an official announcement.

The deal, which is pending Indonesian regulators' approval, will mark SMBC's biggest investment in a non-bank financial businesses in Asia outside of its home market.

SMBC is the core commercial banking unit of Sumitomo Mitsui Financial Group, Japan's third-largest lender, and it sees opportunities in Asia to tap demand among an emerging middle class to buy big-ticket durable goods on credit.

SMBC and Sumitomo Corp declined to comment. The companies are not related, even though they share the same name.

Indonesia, Southeast Asia's largest economy, has been hurt by low commodities prices, and its automobile and motorbike industry has been suffering poor sales this year, prompting the central bank in June to ease regulations on minimum down payments for car and motorcycle loans.

But longer-term, SMBC remains optimistic about the country's growth prospects and hopes to lure customers of the auto and motorbike finance companies to its other services such as consumer finance and credit cards, the sources said.

Reuters

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