32852 - Hana Loan II

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Summary of Investment Information

Project Number

32852

Company Name

BANK KEB HANA, PT

Date SPI Disclosed

Jan 11, 2013

Country

Indonesia

Region

East Asia and the Pacific

Projected Board Date

Feb 11, 2013

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Jun 12, 2021

Department

Regional Industry - FIG Asia & Pac

Industry

Financial Markets

Previous Events

Approved : Feb 13, 2013
Signed : Feb 22, 2013
Invested : Feb 4, 2014

Sector

Commercial Banking - General

Project Description

The proposed investment is part of an IFC effort to support PT. Bank Hana (“Hana Indonesia” or the “Bank”), an existing IFC client, to increase its capacity to lend to small and medium enterprises (“SMEs”). The proposed project will allow Hana Indonesia to expand the volume and maturity of its SME loan portfolio. The proposed project is also consistent with both IFC’s Indonesia and financial markets strategy given that this project will help provide more access to finance for SMEs, promote job creation, and sustainable urbanization.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	30.0
Equity

Development Impact

1. Increasing SME access to finance: SME access to finance in Indonesia is relatively low, with a penetration level of 30% of total SMEs, and with 65% of SMEs still needing additional lending. Hana Indonesia plans to address this gap as it rolls out its expansion plan, by opening more SME branches and networks from 2013 to 2015. This increase in SME lending will also ultimately drive economic growth, job creation, and poverty reduction.

2. Promoting South-South investment: Partnering and supporting a reputable regional bank such as Hana Korea in its expansion in Indonesia where IFC has a strong on-the-ground regional advisory team and Indonesia investment team.

1. Combination of SME skills and financial resources to strengthen the Bank''s strategy: The Bank has decided to pursue SME lending in the next 3-4 years. IFC is providing the financing to help the Bank grow its SME loan volume. As a partner, IFC could also strengthen the Bank''s SME lending strategy with IFC''s advisory services to improve the Bank''s capacity.

2. Funding Diversification: IFC''s facility can facilitate funding diversification of the Bank and access to a broader local investor base, all of which could lead to lower funding costs.

3. Supporting the growth of long-term partner (Hana Korea) to become a leading regional and global player: As part of its south-south initiative, IFC will continue to provide support to its long-term partner Hana Korea, as Hana Korea expands the scope and scale of its operations overseas, particularly in Indonesia.

E&S Category Rationale / Risks and Mitigation

The proposed project involves a senior loan aimed to support Hana Indonesia''s local SME business and the overall portfolio risk is considered to be limited. The proposed project has therefore been categorized as FI-2 in accordance with IFC’s Environmental and Social Review Procedure. The Bank''s SME lending accounts for approximately 25% of the total portfolio and its main sector exposure includes wholesale/ retail trade (32%), manufacturing/ processing (29%), and construction (8%). For this project, Hana Indonesia will be required to screen and monitor its lending SME''s activities against the IFC Exclusion List and the applicable E&S laws and regulations.

The main E&S risks and impacts of the proposed project derive from the E&S risks of the Bank’s lending activities, the capacity and systems in place to manage these risks, and the Bank’s practices with regard to labor and working conditions. Under the requirements of the existing IFC investment, the Bank has appointed an E&S officer and developed a satisfactory environmental and social management system (“ESMS”). The ESMS requires the Bank to assess E&S risks and impacts associated with all investment activities and in particular to screen projects against the IFC Exclusion list and ensure compliance with national E&S laws and regulations. The recent review of the Bank’s E&S performance has shown that while the Bank has met some of the IFC requirements, there are still some key areas than need to be addressed and improved. Hana Indonesia’s labor management was found to be consistent with the requirements of IFC Performance Standard 2 on Labor and Working conditions.

Contacts

For Inquiries About the Project, Contact

Lee, Hwa-Soo (Director and CFO)
Wisma Mulia 52nd floor
Jl. Jend. Gatot Subroto No. 42
Jakarta, 12710
INDONESIA

Phone: (62-21) 522 0222, 522 0223
Fax: (62-21) 522 0133

http://www.hanabank.co.id

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IFC supports its clients in addressing environmental and social issues arising from their business activities by requiring its real sector clients to set up and administer appropriate grievance mechanisms and/or procedures to address complaints from Affected Communities in relation to environmental and social issues arising from IFC's clients' business activities. Since 2012, IFC's Financial Intermediary clients applying the Performance Standards are required to develop External Communications Mechanisms to receive and review inquiries or complaints from any interested party regarding the E&S risks and impacts of their operations.

For IFC projects that are active or under consideration, individual(s), or their authorized representative(s), who allege they have been or will be adversely affected by E&S risks or impacts arising from IFC's clients' business activities, may submit a complaint to IFC directly for consideration. When receiving an E&S complaint, IFC engages with complainants and works with its clients to find solutions to E&S concerns as quickly and efficiently as possible.

Complaints can be submitted to IFC online at www.ifc.org/escomplaints or by email to EScomplaints@ifc.org.

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Online form: available at https://www.cao-ombudsman.org/
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Email: cao@worldbankgroup.org
SMS, WhatsApp, Telegram, and Signal: +1 202 650 2627

CAO receives and addresses complaints in accordance with the CAO Policy, which can be accessed at: https://www.cao-ombudsman.org/policies-guidelines.

This Summary of Investment Information (SII) is prepared by IFC to disclose a factual summary of the main elements of the potential investment. It also includes findings and recommendations related to environmental and social considerations regarding this potential investment. The purpose of the SII is to enhance the transparency of IFC’s activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this SII is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein. It is distributed in advance of IFC Board of Directors’ consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following SII is disclosed in accordance with IFC's Access to Information Policy (AIP) that went into effect on January 1, 2012.

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Task Description	Anticipated completion Date
Nominate a ESMS Coordinator	On or prior to Disbursement
ESMS training plan	On or prior to Disbursement
ESMS training	Within 6 months of disbursement
Submit to IFC examples of E&S due diligence	On or prior to Disbursement
Complete ESMS implementation as per ESMS document	Within 6 months of disbursement

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