MICROCAPITAL BRIEF: Citi, OPIC Loan $20m to Microfinance Program “Danamon Simpan Pinjam” of Indonesia’s Bank Danamon

Citi Indonesia, the Indonesian arm of the global financial services company, and Overseas Private Investment Corporation (OPIC), a development finance institution of the US government, recently announced a USD 20 million term loan to fund a microfinance program of Bank Danamon of Indonesia named “Danamon Simpan Pinjam”. This loan is a part of an initiative of Citi and OPIC to direct USD 250 million to support microfinance lending in emerging markets worldwide.

Minhari Handikusuma, Danamon’s director for Micro Business, stated, “This loan will strengthen our commitment in accelerating expansion in micro financing through Danamon Simpan Pinjam [(DSP)] business, and to pursue our vision to ‘enable millions to prosper’. This year, we will open around 157 new DSP’s outlets across Indonesia to establish total of more than 1,200 DSP’s outlets, to better serve our customers and further provide financial access to the society, particularly our potential customers who live surrounding the traditional markets.” In 2010, Bank Danamon reported total assets of IDR 118 trillion (USD 13.9 billion) and a gross loan portfolio of IDR 82.6 trillion (USD 9.6 billion) with a micro- and small-sized enterprise (MSE) loan portfolio of IDR 26.6 trillion (USD 3.1 billion), or approximately 33 percent of the gross loan portfolio.

By Carol Kim, Research Associate

About Citi Microfinance: Citi Microfinance, created in 2005 as part of Citi Bank, is engaged with approximately 100 client and partner microfinance institutions (MFIs), networks and investors in 40 countries. It aims to expand financial services available to poor people by offering various products and services including financing, access to capital markets, transaction services, hedging foreign exchange risk, credit, savings, remittances and insurance.

About Overseas Private Investment Corporation (OPIC): The Overseas Private Investment Corporation (OPIC) is an agency of the US government that was established in 1971 as a development finance institution. OPIC works with private-sector firms in the US to identify opportunities in emerging markets and create an enabling environment for private enterprise in developing countries. OPIC provides financing through direct loans as well as guarantees, political risk insurance and investment funds. As of September 30, 2010, OPIC reports total assets of USD 7 billion deployed in approximately 150 countries.

About Bank Danamon: Established in 1956, Bank Danamon is a private commercial bank in Indonesia that offers personal banking, commercial banking, financial planning, electronic banking and trade finance. In the wake of the regional financial downturn in 1998, it underwent a series of recapitalizations and mergers as part of the government of Indonesia’s bank restructuring program. In 2003, Danamon was acquired by Asia Financial (Indonesia) Private Limited, a partnership between Fullerton Financial Holding, a subsidiary of Temasek Holdings of Singapore, and Germany’s Deutsche Bank AG. In 2010, Bank Danamon reported total assets of IDR 118.2 trillion (USD 13.9 billion), a gross loan portfolio of IDR 82.6 trillion (USD 9.6 billion), return on assets of 2.8 percent and return on equity of 18.5 percent. It reported micro- and small-sized enterprise (MSE) loan portfolio of IDR 26.6 trillion (USD 3.1 billion), or approximately 33 percent of the gross loan portfolio, for 2010.

Sources and Additional Resources:

Citi Press Release: “Citi, OPIC and Bank Danamon Support the Rapid Growth of the Microfinance Sector in Indonesia with $20 Million Term Funding”, August 2011, http://www.businesswire.com/news/home/20110803007223/en/Citi-OPIC-Bank-Danamon-Support-Rapid-Growth

MicroCapital.org: “MICROCAPITAL BRIEF: The Wall Street Journal Reports on Expansion of Indonesian Banks into Microfinance Sector, $30b in Microloans Are Distributed in 5 Years”, June 7, 2011 https://www.microcapital.org/microcapital-brief-the-wall-street-journal-reports-on-expansion-of-indonesian-banks-into-microfinance-sector-30b-in-microloans-are-distributed-in-5-years/

MicroCapital’s Universe Profile: Citi Microfinance, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Citi+Microfinance

MicroCapital’s Universe Profile: Overseas Private Investment Corporation (OPIC), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Overseas+Private+Investment+Corporation+%28OPIC%29

MicroCapital’s Universe Profile: Bank Danamon, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Bank+Danamon

Browse the MicroCapital Universe and add your entry to the wiki at https://www.microcapital.org/microfinanceuniverse/