UPDATE 2-RHB expands regional footprint with Indonesia buy

* To buy 80 pct stake in Bank Mestari for 1.2 bln rgt

* Has option to buy another 9 percent after 3 years

* Purchase to be funded by 1.3 bln rgt rights issue

* Acquisition part of regional expansion plan

* RHB Capital shares suspended

(Adds more details, analyst comment)

By Julie Goh

KUALA LUMPUR, Oct 19 (Reuters) - Malaysia's fourth-biggest lender RHB Capital (RHBC.KL), slow to expand into Indonesia, plans to now pay $356 million as it plays catch-up in the race to tap into Southeast Asia's most populous country.

RHB joins Malaysia's biggest lender Maybank (MBBM.KL), which last year bought a controlling stake in Jakarta-listed Bank Internasional Indonesia (BNII.JK) and second-ranked CIMB (CIMB.KL), which controls Bank CIMB Niaga (BNGA.JK).

RHB will pay 1.2 billion ringgit ($356 million) in cash for an 80 percent stake in Indonesian commercial bank PT Bank Mestika Dharma, with an option for a further 9 percent stake after three years.

"Obviously, we have been left behind, there's so no doubt about it, but there's never a wrong or right time to go in," RHB Bank Bhd Chairman Azlan Zainol told a news conference.

"If we want to be a major player, we need to be in Indonesia and this is a good time for us," he said.

RHB's acquisition of Bank Mestika is at a price-to-book value of 3.5 times, below the 4.6 times book value Maybank paid for BII and the 4.7 times HSBC Holdings (HSBA.L) paid for PT Bank Ekonomi Raharja Tbk in August this year.

"The price is fair based on Bank Mestika's growth potential. The bank is well-run and ROE (return-on-equity) is decent," said Keith Wee, banking analyst at OSK Investment Bank.

The Indonesian lender has made net profits of more than 60 million ringgit, with return-on-equity of over 15 percent, in the past three years.

RHB said Bank Mestika will seek a listing on the Indonesia Stock Exchange prior to the completion of the stake purchase, expected by June next year.