Shortly after market leader, State Bank of India announced its intention to buy small-sized banks in Indonesia, another state-owned lender Union Bank today said it has initiated talks for possible acquisitions in that country.

"We are in preliminary talks to acquire a small size bank in Indonesia... We have shortlisted a few banks there and hope that we will reach a deal," Union Bank of India's chairman and managing director M V Nair told reporters here.

However, given higher valuations of Indonesian banks, Union Bank will have to take a final call on the proposals after completing the due diligence, Nair said.

Early this week, State Bank's deputy managing director Pratip Chaudhuri had said that the bank is eyeing acquisitions in the south-east Asia, particularly in Indonesia bolstered by Indian companies keenness to step up operations there.

As part of expanding operations overseas, Union Bank also has plans to open a representative office in London in the near future, Nair said.

Though the bank was initially evaluating Brazil as a potential market for acquisition, it later decided to focus on Indonesia taking into account the cultural similarities, he said.

"Indonesia and Brazil are high growth economies. But Indonesia, along with high growth phase, has cultural similarities with India," Nair said.