UPDATE 1-Indonesian banking regulator says Sea Group's Shopee acquires Bank BKE

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JAKARTA, Feb 18 (Reuters) - Indonesia's Financial Services Authority (OJK) said on Thursday that Sea Group's e-commerce arm Shopee had acquired local lender Bank Kesejahteraan Ekonomi (Bank BKE) IPO-KSJH.JK with the aim of transforming it into a digital bank.

OJK official Anung Herlianto said that Shopee, Southeast Asia’s largest e-commerce platform, has yet to make an official application with the banking regulators to transform Bank BKE into a digital institution, but they are “currently preparing the infrastructure to do so.” He told reporters that OJK was preparing regulations for new digital banks, which would likely be released in mid-2021, but that a digital lender like Bank BKE would be expected to prepare 3 trillion rupiah ($213.64 million) in capital.

Sea, whose market capitalisation is $136.5 billion, was not immediately reachable for comment. The Southeast Asian technology group is in the middle of a significant fintech push throughout the fast-growing region of 650 million people and was granted in December a full digital bank licence in Singapore.

Its biggest digital bank rival in Indonesia is likely to be Jago, in which Indonesian payments and ride-hailing group Gojek owns a 22% stake.

Indonesia’s multi-billion digital financial services sector is booming. Of the country’s population of 270 million, half lack bank accounts but most now have mobile phones. ($1 = 14,042.0000 rupiah) (Reporting by Tabita Diela; Writing by Fanny Potkin; Editing by Martin Petty and Ed Davies)