41698 - BTPN SMEGreen I

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Summary of Investment Information

Project Number

41698

Company Name

PT Bank SMBC Indonesia Tbk

Date SPI Disclosed

Dec 11, 2019

Country

Indonesia

Region

East Asia and the Pacific

Projected Board Date

Dec 19, 2018

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Feb 26, 2025

Department

CF4S4 - Regional Industry - FIG Asia & Pac/FIG Inv Ops East Asia & Pacific

Industry

Financial Markets

Previous Events

Approved : Dec 19, 2018
Signed : Dec 3, 2019
Invested : Dec 30, 2019

Sector

Commercial Banking - SME Finance

Project Description

International Finance Corporation (“IFC”) is proposing to extend a local currency senior debt facility of US$150million to PT. Bank BTPN Tbk (“BTPN” or the “Bank”). The project exhibits strong fit with IFC's and World Bank Group (“WBG”) strategic priority in Indonesia to achieve Sustainable and Inclusive Growth. The proceeds will be used by the Bank to expand green financing and to increase lending to Micro, Small, and Medium Enterprises (“MSMEs”) with a focus on two areas, addressing MSME financing gaps through Supply Chain Finance (“SCF”) and promoting lending to women owned MSMEs (“Women MSMEs”).

The Bank is a valued client of IFC since 2009 and was formerly known as PT Bank Tabungan Pensiunan Nasional Tbk, a mid-size commercial bank in Indonesia with focus on financial inclusion and targets low income pensioners, MSMEs and women entrepreneurs at the base of the pyramid. The Bank was rebranded after it was merged with PT Bank Sumitomo Mitsui Indonesia on February 1st, 2019 and became a universal bank serving full spectrum of Indonesia’s customer segments from the retail to corporate. Supported by 19,465 employees, BTPN serves close to 12million customers throughout Indonesia as of Sep-19.

Associated Advisory Engagement

Following the successful completion of the 1st phase of Non-Financial Services (“NFS”) project, IFC is currently supporting BTPN with the implementation of the 2nd phase NFS with the objective of improving the quality and sustainability of the NFS offerings to the bank’s SME clients, while strengthening their capacity. Both phases are under the umbrella of project #597067 EAP WIN.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	150.0
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	Climate (not covered in any category)
Straight Senior Loan	Loans to MSME (mix of Micro and SME)
Straight Senior Loan	Loans to Woman-Owned SMEs

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

Development Impact

The expected development impacts of the Project are as follows: (1) Introduction of new financial products and demonstration effect: The proceeds from the facility will be used by BTPN to grow its SCF and green financing business, two products that are at a very nascent stage in Indonesia despite the growing need and large gap. Based on BTPN's reputation and track record as a leading innovator in the industry supported by a strong and committed Sponsor (SMBC), the Project is expected to have a demonstration effect and encourage the replication of green financing and SCF products by other banks; (2) Increased access to finance for MSMEs: The Project is expected to address the significant financing gap faced by MSMEs through SCF program, which has been identified to be able to effectively tackle information asymmetry and lack of collateral, which typically hinder FIs from expanding reach to the segment; (3) Improve financial access for women-owned SMEs: A portion of the proceeds will be earmarked to finance Women-SMEs, which are still largely underserved by the Financial Institutions in Indonesia; (4) Promote sustainable economic growth: IFC anticipates the Project will contribute to the Indonesia's cumulative GHG reduction targets and towards achieving Indonesia's target to control environmental degradation.

Through this Project, IFC is expected to provide additionality in the area of: (1) Financing Structure: Providing longer-term local currency funding which is not readily available in the market for private commercial banks; and (2) Knowledge, Innovation and Capacity Building: Supporting the Bank in expanding its green financing and SCF programs through advisory services to (a) build capacity on green investment, (b) equip the Bank with expertise on Green House Gas ("GHG") emissions reduction measurement, and (c) support the Bank in designing and scaling up its SCF program.

Indicator	Metrics	Comments	Calendar Year 2022	Calendar Year 2023	Calendar Year 2024
CORE - E and S Management Systems (Y/N)	Compliance/Enhancement		Not Available	Not Available	Not Available

E&S Category Rationale / Risks and Mitigation

The proposed Project is to support BTPN’s expansion in MSME lending through developing climate finance and increasing MSME lending with focus on supply chain and women owned MSMEs. The Project has been categorized as FI-2 according to IFC Sustainability Policy. BTPN is a commercial bank providing consumer and MSME financing in Indonesia and currently exposes mainly to trading, manufacturing and services business sectors. Given the nature of MSME lending activities, the Project underlying environment & social (E&S) risks are considered of limited, that are few in number, generally site-specific, largely reversible, and readily addressed through mitigation measures. The key E&S performance requirements of the Project include the compliances with IFC Exclusion List (extended by additional “no-go activities”), host country E&S laws and Performance Standards where they are applicable.

The Project’s key E&S risks derive mainly from the E&S risks of the supply chain and climate sub-projects to be financed by BTPN, and BTPN’s capacity and quality of E&S risk management system (ESMS) to manage such risks. The key exposures will include automotive and food & beverage sectors as well as small and medium size energy efficiency or renewable energy sub-projects that are not expected to involve any significant E&S risks such as involuntary resettlement, impacts on indigenous peoples or critical habitats. Being an existing client of IFC, BTPN has an ESMS in place and has assigned dedicate E&S responsibility. Under this Project, BTPN will be required to upgrade the existing ESMS and enhance its E&S capacity particularly for handling climate related sub-projects. IFC’s appraisal also found that BTPN continues to be broadly in line with IFC Performance Standard 2 Labor and Working Conditions for its own HR practices.

Contacts

For Inquiries About the Project, Contact

PT. Bank BTPN Tbk
Hanna Tantani
Chief Financial Officer
+62 21 30026200

CBD Mega Kuningan, Jl. Dr. Ide Anak Agung Gde Agung Kav. 5.5 – 5.6. Jakarta 12950
www.btpn.com

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Task Title & Description	Anticipated Completion Date
E&S Officer Training	01/31/2020
Enhance E&S capacity	01/31/2020
Upgrade ESMS	01/31/2020

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