The Bank is 56.7% owned by Sorak Financial Holdings Pte Ltd (Sorak) (Sorak is a consortium owned by Asia Financial Holdings (a subsidiary of Temasek Holdings – Singapore): 50%, Kookmin Bank: 25%, Barclays Bank: 5%, and Malaysia's ICB Financial Group Holdings: 20%). The remaining shareholding structure of the Bank consists of Aranda Investments (Mauritius) Pte Ltd with 6.1%, the Indonesian government with 5.5% and the public with 31.7% stake.

The proposed loan is in Indonesian Rupiah for an amount of up to $125 million equivalent, based on exchange rate value of the disbursement date. The proposed loan is conditional upon an approval from Bank Indonesia, and the fulfillment of all applicable regulations of Bank Indonesia and any other authority in the Republic of Indonesia.

125.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	125.0
Equity

* These investment figures are indicative

The Bank, headquartered in Jakarta, operates a network of about 250 branch offices with over 7,000 employees and 700 ATMs throughout Indonesia.

Given the scarcity of long-term financing in Indonesia, IFC’s medium term funding will help BII achieve a better match of its assets and liabilities and reduce the market risks it faces in this connection. Also the engagement with IFC on issues related to environmental and social requirements will increase the awareness and sensitivity of the BII in these areas. At the level of the end users, the project will help BII to ramp up its commercial lending to SMEs sector. In general, SMEs in Indonesia attract about 90% of the labor force and represent more than 60% of Indonesian GDP. Unfortunately, the commercial banks’ penetration to this sector is still very low. About 80% of Indonesia’s SME remain underfinanced. The big barrier to penetrate the financing for SME lies on technological infrastructure to provide streamlined loan processing and control mechanism. BII is one of the few banks, which are lending to SME sector, but due to lack of medium-term funding in Indonesia, especially in local currency, BII’s expansion into the sector has been limited. The project will help make available to BII’s SME customers access to medium term local currency funding, which is currently in short supply in Indonesia.

By providing the loan, IFC would be playing an active role in helping to: - build a long term partnership with an important local financial intermediary, which shares several common goals with IFC; - improve the asset liability structure of an important local banking institution, thereby reducing its balance sheet risk; and - encourage lending to the underserved SME segment in the local market.

This is a category FI project under IFC''s new environmental and social review procedure. IFC will review BII''s portfolio for its types of transactions, size, tenor, and industry sectors. Depending on the risks in the portfolio, BII will be required to ensure that its operations comply with the relevant IFC exclusion list, applicable national environmental and social laws and regulations, and IFC''s Performance Standards. IFC will assess BII''s capacity to manage environmental and social risks and opportunities, and will recommend ways for any gaps to be filled. As a condition of disbursement, BII will be required to submit documentation of its Environmental and Social Management System. BII will be required to appoint officers to be responsible for implementing the system, and to provide to IFC annual environmental/social performance reports.