Bahrain-based Islamic lender Al Baraka plans to spend $30-50 million to buy a bank in Indonesia, its chief executive officer said on Monday, in the latest move by an international bank into southeast Asia's largest economy.

'Indonesia is a target market for us. We have a representative office there and one of its responsibilities is to find a target,' Adnan Yousif told Reuters.

'Bank Kesawan is one of them,' he said.

Al Baraka and PT Bank Kesawan Tbk were close to signing a deal last year that was put on hold due to the financial crisis, he said. Bank Kesawan is a small Indonesian lender with a market capitalisation of $48.56 million, according to Thomson Reuters data.

Yousif said Al Baraka had now returned to its strategy of growing through acquisitions in Asia and would spend between $30-50 million on an acquisition in Indonesia. He said Al Baraka would prefer one of Indonesia's small to medium-sized private banks.

Al Baraka is the latest bank to show interest in Indonesia's financial services sector as firms look to take advantage of its 250 million population.

Malaysia's fourth-biggest lender, RHB Capital, will buy a controlling stake in a small Indonesian bank, a source familiar with the issue told Reuters on October 16.

Yousif said Al Baraka, which is Bahrain's largest listed Islamic bank with operations in twelve countries predominantly in the Middle East, had yet to begin talks with targets.

The $1 trillion Islamic finance industry is scattered between its main centres, the Gulf Arab region and South East Asia, and its banks are small in size.

Consolidation across regions would help the industry develop larger institutions able to compete with the Islamic operations of large Western banks and standardise its interpretation of sharia, or Islamic law, but previous attempts have failed.

Bahrain-based Islamic investment house Unicorn said last month it is again interested in buying Dubai Group's stake in Malaysia's Bank Islam, after a first attempt at buying a stake in the bank fell through in 2006. – Reuters