news - FMO and Bank Andara sign Letter of Intent

FMO’s CEO Nanno Kleiterp and President Director David Yong of Bank Andara sign the Letter of Intent. In the background are a.o. the Dutch Prime-Minister Mark Rutte and Minister for Foreign Trade and Development Cooperation Lilianne Ploumen

FMO, the Dutch development bank, and Bank Andara (BA) have signed a Letter of Intent, today that entails an IDR equivalent to USD 10mln senior loan.

FMO intends to finance Bank Andara with an IDR equivalent to USD 10mln senior loan. Established in 2009, BA is a wholesale bank providing finance and advisory services to Rural/Agri Credit Banks (“BPRs”) and cooperatives in Indonesia.

The loan will be used to expand BA’s commercial funding of local MFI’s and help the company grow their support by providing efficient systems and technological know-how. The financing will contribute to the creation of jobs and better living conditions of the poor in Indonesia who lack access to finance through the local MFI’s.  

Indonesia’s microfinance sector is one of the largest in the world, with a diversity of around 500,000 MFIs serving more than 40 million people. Still, it’s estimated that more than 52% of the people in Indonesia do not have access to banking services and nearly half of the population lives on less than USD 2 per day. Most MFI’s are small NGOs, village-owned institutions and commercial or rural banks that serve few microfinance clients. The majority of these MFIs are characterized by low growth in outreach and inefficient systems, which is caused by lack of access to affordable funding and technological know-how.

Through MFI financing the unbanked poor are reached, who still represent almost 50% of the total population of 238 million (in spite of Indonesia being a middle-income country). Via the MFIs that are financed by BA, this segment of the population will gain access to finance.

Commenting on the transaction, FMO’s CEO, Nanno Kleiterp said: “FMO is proud to be working together with Bank Andara to continue their support to local MFI’s and improving the living conditions of poor people. The financing will contribute to expanding much needed access to finance”.

Related to the signing of Letter of Intention, David Yong, President Director of Bank Andara says “This upcoming transaction, (subject to the Central Bank of Indonesia approval) indicates strong support and trust by FMO to Bank Andara in carrying out our financial inclusion mission through a wholesale banking business model. This proposed loan will surely increase our credit financing capacity to Microfinance Institutions (MFIs). We will be able to assist more MFIs in meeting the needs of their clients, who are often underserved by formal banking services."

“We also continue to obtain additional funding domestically from institutions, foundations and high net worth individuals as Bank Andara’s business model to serve the low-income communities gains market support. This is in line with our long-term goal to improve community economic development throughout Indonesia,” said David Yong.

For further information, please contact :

FMO

Paul Hartogsveld Communications & PR

Email : p.hartogsveld@fmo.nl

Mobile : +31 6 11 58 91 27  

PT Bank Andara

Tengku Ilyana Habsjah Corporate Communication Head

Email : ilyana.habsjah@bankandara.co.id

EDITOR NOTES

About FMO

FMO (the Netherlands Development Finance Company) is the Dutch development bank. FMO supports sustainable private sector growth in developing and emerging markets by investing in ambitious entrepreneurs. FMO believes a strong private sector leads to economic and social development, empowering people to employ their skills and improve their quality of life. FMO focuses on three sectors that hive high development impact: financial institutions, energy and agribusiness, food & water. With an investment portfolio of EUR 6.3 bln, FMO is one of the largest bilateral private sector development banks. www.fmo.nl

About Bank Andara

Bank Andara was established in 2009 by the shareholders who are known for their strong commitment to develop micro finance in Indonesia to alleviate poverty. The Bank’s current shareholders are: Mercy Corps,  International Finance Corporation (IFC), KfW, Stichting Hivos-Triodos Funds (HTF), Developing World Market Fund S.C.A - SICAV SIF (DWM), and I Wayan Gatha. The Bank has been working with more than 737 Microfinance Institutions (MFIs) and outreached 1.2 million people in Indonesia. Bank Andara plans to reach 1,200 MFIs in the next three years.  As a licensed commercial bank, Bank Andara provides a range of flexible and long term financing instruments and technology based innovative transactional service platform - AndaraLink that is easily accessible by the public. MFI that collaborates with Bank Andara have access to affordable, flexible and long term sources of funding to support sustainable growth. Bank Andara’s business model provides more efficient flows of funding, and better mechanism to deliver sustainable, innovative and accessible banking products and services to the poor in Indonesia through MFIs. Ultimately this is expected to promote the economic’s growth and poverty reduction. For more information please visit www.bankandara.co.id.