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okyo-based Shinsei Bank, one of Japan’s largest banks, is seeking to expand its business in Indonesia, Southeast Asia’s largest economy, which promises enormous growth potential for the firm, an executive has said.

The bank was looking into the possibility of entering the local banking sector by setting up a representative office and establishing a leasing firm in Indonesia to tap into the expanding demand for financing in the domestic market, head of institutional group and senior managing executive officer Hitomi Sato said on Friday in Jakarta after meeting Industry Minister MS Hidayat.

“We expect to establish a leasing business here to serve not only industry, but also consumer needs,” he said, referring to financing for construction projects and heavy equipment purchases, estimated to grow rapidly in line with the country’s robust development, as well other potential lending managed by the planned leasing unit.

In Japan, Shinsei operates its leasing business under its subsidiary, Showa Leasing Co. Ltd..

“Indonesia has something that Japan doesn’t have; a demographic bonus with its high proportion of younger people, especially in the rising middle class. That is a clear market for us,” Sato explained.

A growing middle class drove consumption, which in turn pushed the need for consumer credit and this would be Shinsei’s key business in the country, Sato said.

In the corporate sector, the bank would assist financing for Japanese firms seeking to invest in Indonesia, he added.

The World Bank Indonesia Economic Quarterly report issued last year shows that Indonesia’s middle class — defined by a spending of about US$2.00 per day on average — rose by 61.73 percent to 131 million in 2010 from 81 million in 2003, with more than 7 million people moving from the low-income bracket to the middle class during that period.

According to Sato, his firm will soon discuss its plans with Indonesia’s regulators and also carry out feasibility studies.

“Indonesia is still lacking in legal infrastructure and [foreign] financial firms entering here need a clear legal framework. This is an essential area for improvement,” he said when asked about obstacles hampering investment in the banking sector, but declined to be specific.

Shinsei Bank is the successor to Japan’s trust bank, the Long Term Credit Bank of Japan, relaunched in 2000, after being sold to overseas investors. It is now around one-third owned by buyout firm JC Flowers.

As of Feb. 1, it booked consolidated total assets of 8.6 trillion yen, with a capital adequacy ratio of 10.18 percent.