HANOI: Japan’s biggest bank Mitsubishi UFJ on Thursday bought a 20-percent stake worth $743 million in state-owned VietinBank, the largest-ever merger or acquisition deal in Vietnam’s banking sector.

The deal aims to boost “support for Japanese companies operating in Vietnam”, Bank of Tokyo-Mitsubishi UFJ President Nobuyuki Hirano said on Thursday and to tap Southeast Asian markets after seeing its profits tumble this year.

The Japanese bank last month reported profit in the six months to September dived 58 percent year-on-year to $3.6 billion, partly from declines in stock holdings.

VietinBank or Vietnam Joint Stock Commercial Bank for Industry and Trade, said that the State Bank of Vietnam will still own the majority of its shares but described the deal as “the largest ever M&A [mergers and acquisitions] transaction” in the country’s banking sector.

It is also “the most important investment by a foreign partner in the banking sector in Vietnam,” Le Tham Duong, a professor at the Banking University in Ho Chi Minh-City, told Agence France-Presse also on Thursday.

Japanese investment in Vietnam has increased in recent years, with another Japanese bank, Mizuho Financial Group Inc., buying a 15-percent stake in Vietcombank, Vietnam’s largest listed bank by market value, for nearly $570-million in September 2011.

After a decade of rapid and chaotic bank liberalization, Vietnam now has 42 domestic banks. Many are overloaded with toxic debt, much of it held by inefficient and poorly-managed state-owned companies.

The government has renewed a high-profile anti-corruption drive, going after heads of failing state enterprises and wealthy banking tycoons to ease rising public dissatisfaction over the slowing economy.