PT Bank Mutiara Tbk, rescued by the Indonesian government in 2008, has attracted interest from 18 local and foreign investors for what could be the first sale of an Indonesian bank in more than a year.

Samsu Adi Nugroho, an official at the state Deposit Insurance Agency, which is overseeing the sale of the government's 99.9% stake in the bank, told The Wall Street Journal that foreign investors from the Middle East to Japan have expressed interest. The bank, with a current market value of almost $500 million, nearly collapsed during the financial crisis.

The bank was put on the block last month, marking the fifth time since 2011 the government has tried to sell it. Previous attempts didn't garner enough interest; a rule that the price couldn't be less than what the government paid—$750 million—had deterred buyers.

That requirement has been removed, a boon for the bank, which has 0.01% of its shares listed on the Indonesian stock exchange. Indonesia has no minimum requirement for how much of a stock should be in public hands. Now the bank can be sold at the highest price it fetches, and the sale can be canceled if offers are too low, said Mr. Nugroho, who is the agency's spokesman.

Sofyan Basyir, chief executive at the state-owned PT Bank Rakyat Indonesia, said his company has submitted a bid for Mutiara "as we expect the price now is lower than amount of the government's bailout."

Another hurdle for foreign investors seeking ownership in Indonesian banks last year was a rule stipulating that no more than 40% can go to a single buyer. The rule doesn't apply to this sale, the official said, because the government wants to recover its investment in the bank.

Mr. Nugroho said that his agency expects to announce a successful bidder in August and is aiming to complete the transaction in November. Bank Mutiara provides general services such as checking and savings accounts, consumer and housing loans, and trade finance. It had total assets of more than $1.3 billion at the end of 2013.

The government's bailout of the bank, which was called Bank Century until the rescue, hasn't been without controversy. Last month, a former deputy governor of Indonesia's central bank, Budi Mulya, was taken to court by the country's anticorruption commission. State prosecutors charged Mr. Mulya with allegedly accepting one billion rupiah (about $86,000) from Bank Century founder Robert Tantular in September 2008, a month before the bank requested a bailout. Mr. Mulya has denied any wrongdoing. The trial is still going on.

The central bank and the government have defended the decision to bail out Bank Century. If it had closed during the global financial crisis, they say, there could have been a run on banks in the country, leading to a repeat of the banking system's collapse in the aftermath of the 1997-98 Asian financial crisis.

The latest sale plan comes ahead of presidential elections in July. Investors are watching to see what moves the next government will make to overhaul the financial sector and other parts of the economy.

Indonesia's banks were in demand last year, especially from foreign banks seeking growth away from home. With 240 million people, the country is the most populous nation in Southeast Asia, and its rising middle class and strong economy have been a draw for foreign investors.

Early last year, Japan's Sumitomo Mitsui Financial Group Inc. agreed to pay more than $1.52 billion to buy a 40% stake in Indonesian lender PT Bank Tabungan Pensiunan Nasional. Deal activity has since stalled, partly because of the rule that foreign investors can take no more than a 40% initial stake in any domestic bank.

In mid-2012, Singapore's DBS Group Holding sought to buy Indonesia's Bank Danamon in a $7.2 billion deal, but walked away from the deal in July 2013 after encountering regulatory hurdles.

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