Press Releases

IFC Signs Agreement to Invest $15 Million in Bank Buana in Indonesia

In Washington, DC:
Desmond Dodd

Phone: +202 473 7194 - Fax: +202 974 4384


Washington, D.C., April 25, 2003—The International Finance Corporation, the private sector arm of the World Bank Group, signed an agreement to invest $15 million in the capital of PT Bank Buana Indonesia (BBI). The investment underlines IFC’s commitment to supporting the development of the  Indonesian financial sector and the access to financing, especially for small businesses.

BBI is one of the well managed commercial banks in Indonesia, with particular strength in serving small businesses. The investment is expected to help BBI grow from serving a niche market into a medium-sized bank, thus becoming a more important player in the restructured Indonesian banking sector. The investment would strengthen BBI’s lending activities to small and medium enterprises among other companies in Indonesia. To support the transformation of BBI and help it build a more diverse investor base, IFC plans to work with BBI to improve business practices and corporate governance by implementing international best standards.

“We hope IFC’s investment will help reinvigorate interest in Indonesia by foreign investors, who have scaled back their operations or pulled out since the financial crisis,” said Karl Voltaire, director of IFC’s Global Financial Markets Department. He added, “This investment will also benefit small and medium businesses, which account for about 40 percent of Indonesia’s gross domestic product and employ about 50 percent of the country’s workforce.”

Jimmy Laihad, president director of Bank Buana, predicted that the partnership with IFC will yield significant benefits by strengthening BBI’s capital base and enhancing its business strategy while improving its customer base. He commented, “IFC’s decision to invest in BBI shows that strong-performing companies with good practices can draw interest from international investors.” Bank Buana plans to leverage IFC’s know-how to adopt international best practices in credit evaluation, risk management, information technology, operational procedures and organization to enhance the bank’s corporate governance.  

Bank Buana was established in 1956 as a private national bank. Since July 2000, BBI has been listed on the Jakarta Stock Exchange. The bank operates from its headquarters in Jakarta through a network of 158 branches and 45 automatic teller machines. As of December  31, 2002, BBI had total assets of IDR13.4 trillion (US$1.5 billion equivalent) and net income of IDR 251 billion (US$28.1 million equivalent). In the aftermath of the banking crisis of 1997, out of the 15 largest banks in Indonesia, only BBI and two other banks managed to survive without a government bailout.

The mission of IFC is to promote sustainable private sector investment in developing 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. Since its founding in 1956 through FY02, IFC has committed more than $34 billion of its own funds and arranged $21 billion in syndications for 2,825 companies in 140 developing countries. IFC’s worldwide committed portfolio as of FY02 was $15.1 billion for its own account and $6.5 billion held for participants in loan syndications.