Jakarta May 15, 2006
—The International Finance Corporation (IFC), the private sector arm of the World Bank Group, today announced that it will provide a local currency loan with maximum equivalent of approximately Rp 1.3 trillion to PT Bank Danamon Indonesia Tbk (Bank Danamon). This loan will be IFC’s largest local currency facility offered to a client globally and the largest single transaction to date in Indonesia, which will be mostly oriented by Bank Danamon towards SME and mass market businesses.
“Our long term loan fills the gap that no other financial institution provides. By providing long term and local currency products we hope to help Bank Danamon enhance its risk profile by improving the match between its borrowing and lending,” ”said IFC Director of Global Financial Market Jyrki Koskelo. “The project will encourage other institutions to begin or increase lending activities to entrepreneurs and small and medium enterprises,” he added.
The financing is expected to make available long term, local currency credit to Bank Danamon, which will enable to increase the scale of its microfinance, and lending activities to small and medium enterprises.
“This loan highlights IFC’s commitment to Indonesia by offering competitive solutions for its clients. Our support for Bank Danamon is part of a broader commitment to increase our activities in Indonesia, and continue our support to the development of the SME sector,” said IFC Indonesia Country Manager German Vegara.
The structure of the local currency loan demonstrates that IFC can offer innovative solutions and large scale lending that is required today in the financial and capital intensive sectors such as building materials, infrastructure and manufacturing, supporting such companies’ balance sheet risk and growth
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IFC will provide Bank Danamon with a rupiah-linked loan involving a swap to hedge currency fluctuations that helps the borrower mitigate foreign currency risks. At disbursement Bank Danamon will be able to fix the approximate amount of rupiah required to service the loan, making the transaction equivalent to a rupiah loan.
“We welcome the support from a renowned institution like the IFC, towards supporting our business expansion in the future,” said Sebastian Paredes, President Director of Bank Danamon. “We believe in the potentials of the SME and mass market segments. These two segments in our portfolio have substantially grown over the last couple of years and combined contribute over 30% of our total loans,” said Mr. Paredes.
About IFC:
The mission of IFC is to promote sustainable private sector investment in developing and transition countries, helping to reduce poverty and improve people’s lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY05, IFC has committed more than USD 49 billion of its own funds and arranged USD 24 billion in syndications for 3,319 companies in 140 developing countries.
About Bank Danamon
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PT Bank Danamon Indonesia Tbk. was established in 1956 and as per March 31, 2005 operates 1,357 branches including its DSP and Syariah units as well as Adira, 9,400 ATMs including ATM Bersama and ALTO, in all 32 provinces in Indonesia and supported by almost 30,000 employees on a consolidated basis (including Bank’s subsidiaries).
As per April 31, 2006, Bank Danamon is 69.57% owned by Asia Financial Indonesia (AFI) Consortium, 6.59% by Morgan Stanley Securities Ltd. and 23.84% by the public (ownership interest below 5%).
