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
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.