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| Hana Indonesia |
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| Summary of Proposed Investment |
| This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. |
| Project number | 26283 |
| Company name | PT. Bank Hana Indonesia |
| Country | Indonesia |
| Sector | Finance & Insurance |
| Environmental category | FI |
| Department | Global Financial Markets Group |
| Status | Active |
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| Date SPI disclosed | August 1, 2007 |
| Projected board date | August 31, 2007 |
| Previous Events | Invested: December 21, 2007
Signed: October 18, 2007
Approved: October 15, 2007 |
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| Overview |
Sponsor/Cost/Location |
Development Impact |
Contacts |
Attachments |
| Project description |
| The project involves establishing a strategic alliance with Hana Bank (Hana), a leading financial institution in Korea and existing IFC’s client, in setting-up banking operation in Indonesia. This project is part of Hana’s global strategy to establish operations in selected developing markets in East Asia and Eastern Europe. The project involves an IFC equity investment of up to $5 million, which combined with equity investment from Hana, will be used to acquire a small local bank, PT. Bank Bintang Manunggal (BIMA or the Bank) and to increase the Bank’s capital base. The Bank will become an embryo of Hana’s operation in Indonesia which Hana will significantly grow to achieve Hana’s target to become one of Indonesia’s top 20 banks within 10 years time. |
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| Project sponsor and major shareholders of project company |
The major shareholder of the project company will be Hana Bank. BIMA’s existing shareholder and IFC will hold minority shareholding in the company.
Hana Bank
Hana Bank is a wholly owned subsidiary of Hana Financial Group (HFG). HFG’s shareholding structure as of December 2006 is as follow: Temasek Holding (9.6%), Goldman Sachs (9.0%), Templeton (6.1%), Allianz (4.7%), Tosca (4.2%), and public (the remaining balance). IFC still keeps 0.15% shares in HFG.
Hana is one of the major players of Korea’s banking industry. Since its incorporation as Hana in 1991, it has successfully completed six merger and acquisitions, making it the third largest bank in Korea. At the end of 2006 Hana had total assets of $118 billion and equity of $7.3 billion and enjoyed ratings of A1 from Moody’s and A- from S&P.
BIMA’s shareholders
- BIMA’s extising shareholders are:
- PT. Trisetijo Manunggal Utama (TMU): 90%
- Mr. Bambang Setijo: 10%
Mr. Setijo is an independent businessman with major interests in textile/garment, chemicals and tires manufacturing. In this connection, he controls 2 listed companies – PT. Indoacidatama Tbk. (producer of ethanol, acetic acid and ethyl acetate) and PT. Pan Brothers Tbk. (apparel). |
| Total project cost and amount and nature of IFC's investment |
| The total project cost is estimated at nearly $20 million. The proposed IFC investment includes an up to $5 million equity investment in the Bank. |
| Location of project and description of site |
| BIMA is headquartered in Jakarta, Indonesia. It has two branches in Jakarta, one in Tangerang, West Java and one branch in Salatiga, Central Java, Indonesia. |
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| Anticipated development impact of the project |
Strengthening and deepening Indonesia banking sector - Entry of a reputable and committed regional financial institution to a developing country that needs good foreign strategic investments will facilitate know how transfer, promote best practices, and introduce new and differentiated products and innovative solutions
Supporting Indonesian banking consolidation process – Hana’s entry to Indonesian banking sector will provide significant growth opportunity for a small undercapitalized local bank. In the long run, the Bank is expected to be a major player in the banking sector which eventually fosters more consolidation. This is in line with Bank Indonesia’s banking consolidation plans.
Further promoting trades – Indonesia – South Korea trade has been growing rapidly. Two-way trade in 2006 reached $10.6 billion, up by 6.2% from 2005. The project is expected to promote further trade relationships between Indonesia and Korea as BIMA would also promote trade products including those involving Korean companies.
Create significant job opportunity – As a small bank, BIMA now only has 100 employees. As Hana plans to grow the Bank’s assets, the Bank will need a substantial increase in number of employees. |
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| IFC's expected development contribution |
IFC creates a good growth opportunity that would not otherwise exist for a small undercapitalized local bank by creating access to a committed foreign strategic partner. BIMA is one of the many small Indonesian banks with capital of less than Rp 100 billion – a minimum capitalization amount required by Indonesia’s Central Bank not later than 2010.
IFC provides important support to Hana as it expands the scope and scale of its operations overseas to become a global player. IFC’s support is important for Hana’s entry to Indonesia, including that Hana relies on IFC’s presence and knowledge of the Indonesian market to identify BIMA, run and hopefully complete the acquisition process.
IFC’s catalytic role in the project allows for Hana’s investment in BIMA. Hana and BIMA’s existing owners would be more confident to collaborate and partner in BIMA if IFC is present as a shareholder in the Bank.
IFC contributes to the strengthening of Indonesia’s banking sector by bringing in best practices, creating differentiated products and services and implementing innovative strategies to be driven by Hana’s management team. In addition, IFC helps in diversifying the base of foreign investors in Indonesian banking sector. |
| Environmental and social issues - Category FI |
This project has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure.
During appraisal, IFC will analyze the FI portfolio, for types of transactions, size, tenor and industry sectors and determine the Applicable Performance Requirements, if any, that would include a combination of:
- The IFC FI Exclusion List and/or
- The applicable National Social and Environmental Laws and regulations and/or
- The IFC Performance Standards
IFC will also review, if required, the capacity of the FI to manage social and environmental risks and to establish and maintain a Social & Environmental Management System (SEMS). If required, IFC will suggest Supplemental Actions to address any gaps in the SEMS.
Based on the review, the project will be required to:
- Develop an, or upgrade, if necessary, any existing SEMS, prior to disbursement to the satisfaction of IFC
- Identify responsible, qualified persons to manage and implement the SEMS
- Commit to implement the SEMS, to ensure that its investments/activities are in compliance with the Applicable Performance - Requirements
- Submit a periodic report to IFC as per a format to be provided by IFC |
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| For inquiries about the project, contact: |
Mike Ko, Project Manager,
Global Business Strategy Team
Hana Financial Group
27-3, Yeouido-dong, Yeongdeungpo-gu, Seoul, Korea
Phone: 82-2-2002-1743
Fax: 82-2-2002-2755
Email : mikeko@hanafn.com |
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| For inquiries and comments about IFC, contact: |
General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster |
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