State investment arm Khazanah Nasional said today it has started talks on buying a strategic stake of at least 25 percent in Indonesia's Bank Lippo.

Khazanah said in a statement it expects to start formal negotiations in due course about acquiring "a significant strategic interest of at least 25 percent of total shares" in the bank.

It said it plans to acquire the stake either directly or indirectly, both on a standalone basis as well as with "other institutions of equal high standing and credibility."

Regional investment giant

"The purpose of the proposed investment, if implemented, is a strategic financial investment and commitment by Khazanah to the Indonesian financial and banking sector," it said.

The Malaysian government aims to transform Khazanah into a regional investment giant.

Last year it transferred to Khazanah billions of dollars' worth of shares held by the Finance Ministry in some 30 listed companies.