45295 - KB Bukopin Debt

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Summary of Investment Information

Project Number

45295

Company Name

PT Bank KB Indonesia Tbk

Date SPI Disclosed

Jul 6, 2022

Country

Indonesia

Region

East Asia and the Pacific

Projected Board Date

Mar 30, 2022

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Nov 7, 2025

Department

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

Industry

Financial Markets

Previous Events

Approved : Mar 30, 2022
Signed : May 31, 2022
Invested : Aug 25, 2022

Sector

Commercial Banking - SME Finance

Project Description

The proposed project entails a senior debt facility for up to US$300 million in IDR equivalent, provided directly and indirectly for PT. Bank KB Bukopin (“Bukopin” or the “Bank”), a 67% owned subsidiary of the largest South Korean commercial bank, KB Kookmin Bank Co., Ltd. (“KBB” or the “Sponsor”). (the “Project”)

The Project will be structured as a social bond (the “Social Bond”) in line with the International Capital Market Association’s (“ICMA”) Social Bond Principles (“SBP”) and/or the ASEAN Social Bond Standards (“SBS”). The Project will be the first ever Social Bond to be solely dedicated to supporting socially oriented financing in conformity with the eligibility criteria set under SBP, with the objective of supporting post-COVID recovery. By funnelling financial resources through the Social Bond, targeting social segments which have been amongst the worst hit by the pandemic or play an essential role in sustainable recovery, IFC will be contributing to an inclusive and resilient post COVID-19 recovery in Indonesia, which is in line with the “Building Back Better” approach.

Associated Advisory Engagement

IFC will further explore potential advisory services support for Bukopin aimed at: (i) setting up the Social Bond Framework to help manage project selection and evaluation, management of proceeds and reporting; (ii) strengthening affordable housing finance; and (iii) developing the Supply chain financing business model.

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	Housing Loans to Individuals
Straight Senior Loan	Loans to MSME (mix of Micro and SME)
Straight Senior Loan	Long Term Loans to Corporates
Straight Senior Loan	Infra JV Projects
Straight Senior Loan	Loans to Woman-Owned SMEs
Straight Senior Loan	Housing Loans to Individuals
Straight Senior Loan	Loans to MSME (mix of Micro and SME)
Straight Senior Loan	Infra JV Projects
Straight Senior Loan	Long Term Loans to Corporates
Straight Senior Loan	Loans to Woman-Owned SMEs

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

Development Impact

The Project has an Anticipated Impact Measurement and Monitoring ("AIMM") rating of Good. The most significant, expected Project-level outcome is greater access to finance for MSMEs including women-owned businesses, affordable housing, some sectors of basic infrastructure, and essential services such as education and healthcare. IFC anticipates the investment will contribute to greater market integration by demonstrating the feasibility of issuing thematic instruments that are aligned to international principles and will drive much-needed financing to underserved social sectors, especially in the wake of the COVID-19 crisis.

IFC's additionality is both financial and non-financial: (i) improved access to long-term funding, (ii) promoting sustainable financing solutions, (iii) demonstration effects through the Social Bond, and (iv) helping Bukopin develop E&S Management Systems. IFC investment will contribute to pioneering a social bond category which is solely dedicated to the socially essential segments based on the eligibility criteria under the ICMA SBP to support inclusive and resilient recovery post COVID. And, if successful, it is expected to encourage similar social bond issuances by other financial institutions. In addition, IFC will also support the Bank to establish its social bond framework following the international best practice and align it with the ICMA SBP and/or the ASEAN SBS.

E&S Category Rationale / Risks and Mitigation

The Project entails a senior debt facility to be structured as a social bond in line with ICMA's SBP. While Bukopin is a commercial bank in Indonesia that provides lending to corporate, MSME and retail customers and has exposure to sectors of potentially higher E&S risks such as construction, manufacturing, transportation, mining and agriculture, proceeds from the Project will only be used to support MSMEs (including women-owned MSMEs) and affordable housing activities. For avoidance of doubt, coal- and palm oil-related activities, any greenfield development or infrastructure as well as other higher risk activities that involve (i) involuntary resettlement; (ii) risk of adverse impacts on Indigenous Peoples; (iii) significant risks to or impacts on the environment, community health and safety, biodiversity, cultural heritage; or (iv) significant Occupational Health and Safety risks, will not be eligible for financing using the Project proceeds. The Project is expected to have medium E&S risk and, therefore, categorized as Category FI-2 according to IFC Sustainability Policy. The applicable E&S performance requirements for the Project include the IFC Exclusion List, applicable national E&S laws and regulations. It is envisioned that additional asset classes, including essential healthcare and education services and basic infrastructure such as water and telecom services, may be supported conditional upon Bukopin satisfactorily upgrading its E&S management system (ESMS), allowing the Bank to manage E&S risks in line with IFC E&S requirements for these types of sub-projects

IFC will periodically disclose the names, locations and sectors for Category A sub-projects that have been supported by IFC investments through financial intermediaries, subject to regulatory constraints and market sensitivities. The sub-project(s) listed below reflect(s) the status of the portfolio as of July 1, 2020.

The Project entails a senior debt facility to be structured as a social bond in line with ICMA’s SBP. While Bukopin is a commercial bank in Indonesia that provides lending to corporate, MSME and retail customers and has exposure to sectors of potentially higher E&S risks such as construction, manufacturing, transportation, mining and agriculture, proceeds from the Project will only be used to support MSMEs (including women-owned MSMEs) and affordable housing activities. For avoidance of doubt, coal- and palm oil-related activities, any greenfield development or infrastructure as well as other higher risk activities that involve (i) involuntary resettlement; (ii) risk of adverse impacts on Indigenous Peoples; (iii) significant risks to or impacts on the environment, community health and safety, biodiversity, cultural heritage; or (iv) significant Occupational Health and Safety risks, will not be eligible for financing using the Project proceeds. The Project is expected to have medium E&S risk and, therefore, categorized as Category FI-2 according to IFC Sustainability Policy. The applicable E&S performance requirements for the Project include the IFC Exclusion List, applicable national E&S laws and regulations. It is envisioned that additional asset classes, including essential healthcare and education services and basic infrastructure such as water and telecom services, may be supported conditional upon Bukopin satisfactorily upgrading its E&S management system (ESMS), allowing the Bank to manage E&S risks in line with IFC E&S requirements for these types of sub-projects.

The key E&S risks and impacts of the Project will derive from the business activities supported by the Project and the capacity and quality of Bukopin's ESMS in identifying and managing such risks. These risks are typically related to labor and working conditions, life and fire safety, occupational health and safety, pollution and waste management, and impact on local communities. Bukopin is in the process of enhancing its practices and operations in line with IFC Performance Standard 2. Bukopin will be required to provide IFC with periodic reports verifying its use of the Project proceeds and implementation of the ESMS. Currently, Bukopin doesn't have an ESMS and no officer of the Bank has been assigned responsibility for managing E&S risks. Under this Project, Bukopin will be required to appoint an E&S officer, establish an ESMS and maintain proper capacity to screen, assess and manage the E&S risks according to the E&S performance requirements as indicated above.

Task Title & Description	Anticipated Completion Date
Nominate E&S Officer	07/15/2022
Develop ESMS to assess E&S risks of MSMEs and affordable housing activities	10/15/2022
Conduct ESMS training	10/15/2022
Build sufficient capacity to support ESMS implementation and enhance ESMS to manage E&S risks of essential healthcare and education service as well as basic infrastructure activities in line with IFC E&S requirements for such projects	07/15/2023
Complete policy enhancement to bring them in line with PS2	07/15/2022
Disclose summary of ESMS	07/15/2023

Contacts

For Inquiries About the Project, Contact

PT Bank KB Bukopin Tbk
Heru Helbianto
Head of Treasury Department
+62 21 7988266
heru.helbianto@kbbukopin.com
Jl. MT. Haryono Kav. 50-51, Jakarta, 12770, Indonesia
https://www.bukopin.co.id/

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