Mitsubishi UFJ Financial Group Inc. (MTU, 8306.TO) has agreed to buy a 51% stake in Thailand's Bank of Ayudhya PCL (BAY.TH), a person close to the discussions said Friday, in what could be the biggest acquisition by a Japanese bank in fast-growing Southeast Asia.

The stake, which based on the Thai bank's market capitalization could be worth over $4 billion, may be announced as early as next week, the person said.

MUFG will first buy out GE Capital's entire 25% stake in Thailand's fifth-biggest bank by assets, the person said.

Then, Japan's biggest lender will launch a tender offer for the remaining shares of Bank of Ayudhya, although the other big shareholder in the Thai bank, Thailand's Ratanarak family, will keep its 22% stake and work with MUFG to run the bank as a partner, the person said.

MUFG's move comes at a time when Japanese banks are rapidly expanding into Southeast Asia, lured by the region's explosive growth as the Japanese market stagnates and population growth at home shrinks.

Last year, for instance, MUFG agreed to buy a 20% stake in VietinBank from the Vietnamese government for about 60 billion yen ($720 million).

MUFG's two smaller rivals, Sumitomo Mitsui Financial Group Inc. (SMFG, 8316.TO) and Mizuho Financial Group Inc. (MFG, 8411.TO) are also seeking growth in Southeast Asia.

Last month, Sumitomo Mitsui Financial Group struck a deal to pay around $1.5 billion for a 40% stake in an Indonesian lender. Mizuho in 2011 bought a 15% stake in Vietcombank or The Bank for Foreign Trade of Vietnam for $760 million.

Japan's insurance companies also are carving out the same path to growth as their banking peers.

Earlier this month, insurer Dai-ichi Life Insurance Co. (DCNSF, 8750.TO) agreed to pay around $340 million for a 40% stake in Indonesian insurer PT Panin Life.

An ongoing effort to sell a 20% stake in Thai Life Insurance Co. also has attracted interest from Japanese suitors, people familiar with the situation have said.

Write to Atsuko Fukase at atsuko.fukase@wsj.com

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