Taiwan-based Cathay Financial (CFH) has decided to raise its stake in Indonesian lender Bank Mayapada Internasional (BMI), Reuters has reported.

Financial details of the transaction have not been made public.

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CFH will remain as the majority stakeholder in BMI by raising its stake to 51%, according to a regulatory filing.

At the end of last year, CFH had a stake of 37.33% in BMI – the biggest holding in the bank – through its life insurance unit, the report added.

Mayapada Group’s Indonesian arm Mayapada Karunia was the second-largest stakeholder with a 26.42% interest.

BMI, in its first quarter ended March, reported IDR79.2bn ($5.52m) in net profit – a 44.5% drop from the prior year.

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Its non-performing loan ratio stood at 6.94% as against the industry average of 2.77% and regulatory threshold of 5%.

Mayapada Group founder Tahir said: “At times like this, partners have to strengthen the capital but we don’t know how much capital will be injected yet.”

Reports emerged stating that Tahir had already injected capital into the bank several times to help maintain the capital adequacy ratio, which stood at 13.75% as of March.

Currently, CFH is conducting due diligence for the stake purchase in the mid-sized Indonesian lender.

The Financial Services Authority (OJK) deputy commissioner for banking surveillance Slamet Purnomo said that the due diligence is expected to be completed by next week.

In a text message, Purnomo said: “OJK is supportive because Cathay Financial Holdings is the largest financial institution in Taiwan.”

He added that this move could support the bank’s development and Indonesia’s economy.

Last month, Indonesia’s banking regulator OJK also approved South Korea’s KB Kookmin Bank to acquire a controlling stake in Bank Bukopin.