34329 - BTPN SALPS II

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Summary of Investment Information

Project Number

34329

Company Name

PT Bank SMBC Indonesia Tbk

Date SPI Disclosed

Oct 24, 2014

Country

Indonesia

Region

East Asia and the Pacific

Projected Board Date

Nov 25, 2014

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Jun 12, 2021

Department

Global Industry, Financial Markets

Industry

Financial Markets

Previous Events

Approved : Dec 2, 2014
Signed : Feb 27, 2015
Invested : Mar 30, 2015

Sector

Commercial Banking - Microfinance

Project Description

PT. Bank Tabungan Pensiunan Nasional Tbk., (“BTPN” or the “Bank”) is a mid-size commercial bank and is a valued client of IFC since 2009. The Bank uses a unique business model combining access to finance and access to training, serving the high potential mass market and targeting low income pensioners, the micro-small business segments and women entrepreneurs at the base of the pyramid in Indonesia. The project is a part of IFC’s inclusion agenda in Indonesia and proposes to extend loans in Indonesian Rupiah which will be used to (i) fund the growth of the Bank’s micro-small business finance activities and expansion of the Bank’s subsidiary, BTPN Syariah’s “productive poor” business line which is targeted at women entrepreneurs at the base of the pyramid, and (ii) strengthen its funding base in order to reduce asset and liability mismatch with a longer tenor financing package.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	300.0
Equity

IFC's loan to the financial institution described in this SII is targeted for on-lending to the following sector(s):

Product Type	Use of Proceeds
Straight Senior Loan	Loans to Microfinance Borrowers

IFC's Definitions of Targeted Sectors can be found here.

Development Impact

1) Increasing Access to Finance for People at the Base of the Pyramid - Strengthening a strategic partnership with BTPN which has a good business model and presence in all 33 provinces across Indonesia, including underserved rural areas, thus reaching customers at the base of the pyramid with a variety of products.

2) New Product Development - Increasing the Bank''s ability to provide integrated services including "capital to grow'' and "capacity to grow", introduce new products such as agricultural finance, develop new delivery channels (i.e. branchless banking) to reach underserved low income pensioners, MSMEs and women entrepreneurs at the base of the pyramid.

3) Empowerment of Women - financing women borrowers through the "productive poor" program managed by BTPN Syariah to empower them to grow their businesses and support their families.

(1) Strategic Partnership : IFC will continue as a strategic partner for BTPN, in several areas through IFC''s combined approach in investment and advisory services. IFC can continue to add value to this partnership through additional advisory service support, for entering new business segments such as agri-finance, housing finance, branchless banking and micro insurance.

(2) Balance Sheet Strengthening: BTPN is dependent on short term deposits for its funding. IFC''s long term facility will improve the funding profile of the bank and enable better management of asset liability maturity position.

(3) Counter-Cyclical role: Given the market volatility in emerging markets and expected decline in FDI flows to markets such as Indonesia, IFC expects to play a critical counter-cyclical role supporting investment in the Indonesian banking sector, in particular in an existing strategic client such as BTPN, and also sending an important signal to the market.

E&S Category Rationale / Risks and Mitigation

The proposed project involves a loan of up to US$300 million ($75 million to $100 million from IFC’s own account and $200 million to $225 million in the form of an IFC B loan and/or parallel/participating loans) aimed to support the PT. Bank Tabungan Pensiunan Nasional, Tbk (BTPN) overall business and in particular the growth of the Bank’s micro-small business finance activities and expansion of the Bank’s subsidiary, BTPN Syariah’s “productive poor” business line which is targeted at women entrepreneurs at the base of the pyramid. The Bank is focused on low income pensioners and micro-small businesses and the overall portfolio risk is considered to be medium. The project has therefore been categorized as FI-2 in accordance with IFC’s Environmental and Social Review Procedure. The Bank’s microfinance and SME business accounts for circa 22% and less than 1% respectively and the sector exposure is mainly in trade and services. For this project the client will be required to screen, apply and monitor its lending activities against the IFC Exclusion List and the applicable E&S laws and regulations.

The main E&S risks and impacts of the project derive from the E&S risks of the Bank’s lending activities, the capacity and system 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 an environmental and social management system (ESMS). The ESMS requires, among other things, the Bank to screen all potential loans against the IFC Exclusion list and ensure compliance with national E&S laws and regulations. The Bank’s E&S risk management is considered overall satisfactory. The Bank’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

Arief Harris TandjungDirectorMenara Cyber 2, 24th FloorJl. HR Rasuna Said Block X-5 No. 13Kuningan, Jakarta 12950Telp : +62 21 30026200Direct : +62 21 30026246Fax : +62 21 30026309

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