SYDNEY | Tue Aug 30, 2011 4:10am EDT
SYDNEY Aug 30 (Reuters) - Australia and New Zealand Banking Group is in early stage talks to buy Japan's Aozora Bank which has a market value of $4.2 billion, two sources familiar with the deal said on Tuesday, as it seeks to expand in Asia.
ANZ is eyeing Aozora for its deposit base and also to use it as a springboard to tap trade flows in Japan, which is Australia's second-largest trading partner after China.
"The talks are at an embryonic stage," one source said, adding the deal should satisfy all the main parameters such as pricing and potential for return on investments.
An ANZ spokesman declined comment on any deal but said the bank was always looking at opportunities to advance its Asian strategy, which calls for its Asian businesses to account for up to 30 percent of group profit by 2017.
On Monday the Australian Financial Review said ANZ was looking at buying either Japan's Tokyo Star Bank or Aozora Bank.
Aozora Bank is majority-owned by private equity firm Cerberus Capital Management .
Aozora shares have risen 14 percent over the past two days on expectations of an ANZ bid.
ANZ is looking at Asia for growth and has invested nearly $6 billion in capital in the region to grow its institutional, trading desks and wealth advisory arm.
It bought some Asian assets of RBS in 2009 for $550 million but its recent efforts to buy in Asia have been stymied. It lost out on a bid to gain control of Korea Exchange Bank for nearly $4 billion last year.
ANZ shares ended 0.15 percent lower at A$20.18 on Tuesday.
(Reporting by Narayanan Somasundaram; Editing by Mark Bendeich)