43613 - DCM OCBC NISP 2

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Summary of Investment Information

Project Number

43613

Company Name

PT BANK OCBC NISP TBK

Date SPI Disclosed

Mar 13, 2020

Country

Indonesia

Region

East Asia and the Pacific

Projected Board Date

Feb 5, 2020

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

Oct 28, 2020

Department

Regional Industry - FIG Asia & Pac

Industry

Financial Markets

Previous Events

Approved : Feb 5, 2020
Signed : Feb 5, 2020
Invested : Oct 26, 2020

Sector

Commercial Banking - General

Additional Project Attributes

Blended Finance

Project Description

The proposed project entails an investment in a medium-term debt instrument, which is under a private placement arrangement between PT Bank OCBC NISP Tbk (“OCBC NISP” or the “Bank”) and IFC, mainly to finance green projects and women-owned small and medium enterprises (“WSMEs”). The instrument is expected to comprise of two tranches, corresponding to the distinct use of the proceed. The Project will be an expansion of IFC’s engagement with the Bank in 2018 where IFC supported the funding for green financing portfolio, of which the Bank is the first commercial bank to receive such funding. OCBC NISP is listed in Indonesia Stock Exchange. The Bank was established in 1941, the fourth oldest bank in Indonesia. The Bank is 85% owned by the OCBC Overseas Investment Pte. Ltd, a 100% subsidiary owned by the Oversea-Chinese Banking Corporation Limited (“OCBC Bank”), listed in Main Board of the Singapore Exchange. The proceeds of the proposed investment will be mainly used to support the Bank’s lending program to climate-friendly projects which includes, energy efficiency projects and green building and to support the Bank’s increasing focus in serving woman entrepreneurs and customers.

Associated Advisory Engagement

IFC is expected to provide capacity building advisory programs to the Bank, which mainly include: i) Climate Finance training programs and workshops; ii) capacity building on project evaluation and monitoring through the implementation of CAFI tool; and iii) others

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	200.0
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 Woman-Owned SMEs
Straight Senior Loan	Climate (not covered in any category)

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

Development Impact

Project Outcomes (i) Improve access to finance for WSME: The proceeds from gender tranche will be channeled towards WSME which will help to reduce finance gap in the WSME; (ii) Expand access to finance for climate-smart projects and environment impact: The proceed from green tranche will increase the availability of financing for climate smart projects in the country. Thus, the Project will help in the creation and development of country's sustainable / climate finance market and contribute to the overall reduction in the GHG emission; Contribution to Market Creation (i) Inclusiveness: The Project would support improvement of access to finance for underserved WSMEs and expected to demonstrate to other market participants the viability of differentiated financial products for WSME (ii) Sustainability: The Program would support the development of a green finance market in Indonesia. Building on IFC's successful effort on investing in Indonesia's first non-sovereign green bond, the Project is expected to further deepen the climate finance market and encourage other financial institutions to replicate the issuance of green financing instruments. Further, the Program is expected to reinforce market standards in line with international green lending principles.

IFC's additionality is both financial and non-financial: (1) financing beyond what is available in the market, (2) innovative instruments, (3) knowledge sharing and capacity building, and (4) demonstration effect. Through the Project IFC would provide longer-tenor funding to the Bank, which is not available in the local market. In addition, IFC would also support the Bank in financing and structuring of the privately placed debt instrument to finance projects that are in compliance with Global Green Bond Principles and Social Bond Framework, a new financial instrument. IFC will further transfer its global knowledge in green financing through a technical support on green project identification and development.

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 invest into the sustainability bond, issued via private placement, that will finance NISP’s on-lending to eligible green projects (including refinancing of existing portfolio projects) as well as to women-owned SMEs in Indonesia. Based on the review of pipeline/ portfolio to be potentially supported by the project, the project potentially will support small hydro, biomass power plants, solar power, energy efficiency, wastewater treatment and green buildings. The higher risk sub-projects including these involving 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 will not be eligible for financing from the proceeds of this loan. The project has therefore been categorized as FI-2 in accordance with IFC's Sustainability Policy. Coal related projects including coal mining, coal transportation or coal-fired power plants, as well as infrastructure services exclusively dedicated to support any of these activities and large dams as defined by the WCD will be excluded. Applicable performance requirements will include the IFC Exclusion List, relevant national E&S laws and screening out sub-projects potentially to be exposed to significant/high E&S risk of the type contemplated by the IFC Performance Standards.

The key risks are related to the ability of the bank to identify and manage environmental and social risks associated with its lending activities, in particular lending to companies operating in energy production and distribution. Additional E&S risks and impacts of the bank derive from the capacity and systems in place to manage these risks. The bank has assigned responsibility for the ESMS implementation. NISP has developed and implemented an Environmental and Social Management System (ESMS) outlining the procedures, responsibilities and tools for undertaking E&S risk management in compliance with the IFC Exclusion List and national E&S laws and regulations. The client will be required to apply its existing ESMS and ensure screening out of higher risk transactions from the use of IFC’s proceeds. The bank's HR Policy and procedures are compliant with PS2 requirements on Labor and Working conditions.

Contacts

For Inquiries About the Project, Contact

PT Bank OCBC NISP Tbk
Investor Relations
Investor Relations
+62 (0) 21 - 255 33 888
ir@ocbcnisp.com
OCBC NISP Tower
Websitehttps://www.ocbcnisp.com/

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