40848 - BOP BSS Micro Loan

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Summary of Investment Information

Project Number

40848

Company Name

BANK SAHABAT SAMPOERNA, PT

Date SPI Disclosed

Jul 19, 2022

Country

Indonesia

Region

East Asia and the Pacific

Projected Board Date

Jul 31, 2022

Environmental Category

FI-2 - Limited

Status

Pending Approval

Last Updated Date

Oct 27, 2023

Department

Regional Industry - FIG Asia & Pac

Industry

Financial Markets

Sector

Commercial Banking - General

Project Description

The proposed project consists of a 3-year secured senior loan facility/social bond for up to US$40 million in IDR equivalent; provided for PT Bank Sahabat Sampoerna (“BSS”, or the “Bank”) – under the “Base of the Pyramid Program” (“BOP Program”), part of Fast Track COVID-19 Facility. The BOP Program is designed to support lending to micro, small and medium enterprises (“MSMEs”) by financial institutions in emerging markets in response to the COVID-19 pandemic.

The proceeds from the proposed secured senior loan facility/ social bond will be utilized by BSS to support lending to MSMEs, which are underserved and significantly impacted by COVID-19 pandemic.

BSS is a private bank sponsored by the PT Sampoerna Strategic Group (“SSG”, the “Group”, or the “Sponsor”) which is a large conglomerate established by Sampoerna family in Indonesia. The Bank is controlled by SSG through PT Sampoerna Investama, which currently holds 64.24% stake in the Bank.

The Bank has exhibited a strong and proven track record in the MSMEs segment, which constitutes more than 70% of the Bank’s loan portfolio through a network of 21 branches. To boost its business, BSS also developed a loan acquisition scheme whereby it partnered with its affiliated cooperative partner, Koperasi Simpan Pinjam Sahabat Mitra Sejati since 2011.

Sponsor / Cost / Location

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 MSME (mix of Micro and SME)

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

Development Impact

(i) Stakeholder’s Effect: increased access to finance for MSMEs. The Project supports BSS to provide much-needed financing to microentrepreneurs and small businesses and aid them in overcoming liquidity constraints and returning to their previous income generating capacity. (ii) Market Creation: resilience. The Project will support resilience amongst microfinance and BOP finance providers catalyzing investments in the sector by demonstrating the viability of lending to BOP providers and crowding in other sources of international and domestic finance in support of these lenders.

The Project will support BSS with a 3-year term financing, not readily available in the market and increasingly scarce since the outbreak of the COVID-19 pandemic. BSS currently does not have wholesale funding and is completely dependent on deposits (99% less than 1-year maturity). The proposed IFC investment will be the first whole-sale funding to the Bank, which will help it develop its wholesale funding sources and manage its asset and liability mismatch.

E&S Category Rationale / Risks and Mitigation

The proposed project entails a senior loan to support PT Bank Sahabat Sampoerna (BSS)'s lending to micro, small and medium enterprises (MSMEs), including women-owned MSMEs, in Indonesia. BSS is a commercial bank and provides loans to retail, MSME and corporate customers. Its corporate lending is mainly extended to other local financial institutions that provide micro credits and consumer financing for individuals. BSS's borrowers are mainly in the business sectors of low or medium E&S risks, such as wholesale and retail, finance, agriculture, services, hospitality, manufacturing, logistic and real estate. The project will not support any coal-related or oil palm plantation related activities. It will also not support any higher E&S risk activities that involve (a) involuntary resettlement, (b) risk of adverse impacts on indigenous peoples, (c) significant risks to or impacts on the environment, community health and safety, biodiversity, cultural heritage, or (d) significant occupational health and safety risks. The project's main E&S risks will derive from BSS's MSME lending activities to be supported by the project and BSS's capacity and quality of environmental and social risk management system (ESMS) in place to manage such risks. Typical E&S risks associated with MSME lending activities may relate to occupational health and safety, life and fire safety, labor and working conditions, pollution control and waste management, among others. The project is expected to have overall medium E&S risks and has been categorized as FI-2 in accordance with IFC's Sustainability Policy. Applicable E&S performance requirements for the project will include the IFC Exclusion List and relevant national E&S laws and regulations.

BSS currently does not have an ESMS and has not assigned E&S roles and responsibilities. Under this project, BSS will be required to designate an ESMS officer and establish an ESMS to screen, assess and manage the E&S risks against the E&S performance requirements. The labor practices of BSS are found overall consistent with the objectives of IFC's Performance Standard 2 on Labor and Working Conditions.

Contacts

For Inquiries About the Project, Contact

PT Bank Sahabat Sampoerna
Sjianata
Finance
(+6221) 5795 1234
Sjianata@banksampoerna.com
Sampoerna Strategic Square, North Tower, Mezzanine Floor,Jl.Jend. Sudirman Kav. 45-46, Jakarta,1293
https://www.banksampoerna.com/en/home/

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Task Title & Description	Anticipated Completion Date
Nominate ESMS officer	02/20/2023
E&S training	02/20/2023
Develop ESMS	02/20/2023

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