Liquidity remains one of the biggest concerns of the diamond industry. The USD 15 billion Diamond Financing industry has seen lot of changes in the recent past. Last year, the industry saw the closure of Antwerp Diamond Bank (ADB), which had been the primary pillar of financing in the diamond industry since its inception in 1934. Before ceasing its operations, ADB was the world’s second largest bank in the world after ABN AMRO. The shutdown of ADB served a major blow to the Diamond industry which was already facing liquidity crisis.
Fortunately, National Bank of Fujairah (NBF) has announced that it would embrace this opportunity and fill in the hole left by ADB. NBF has recently formed a special team that will deal funding the diamond trading, cutting and polishing sectors. NBF has recruited industry experts from ADB to support its new operations.
Similar change is also taking place in India – the world’s largest source of diamond processing. IndusInd Bank Limited, a Mumbai based private sector bank is keen on expanding its jewelry financing business. With an existing diamond business portfolio of INR 1,500 crores (approx. USD 231 million) IndusInd Bank will be acquiring the diamond and jewelry financing business of Royal Bank of Scotland N.V. (RBS), which has an estimated loan book of approximately USD 721.7 million. The deal is still awaiting regulatory approval. IndusInd bank will also enter into partnership with ABN AMRO Bank NV to acquire insights and cooperation in the diamond and jewelry financing business.
The Second Dubai Diamond Conference that took place this week had a panel running on industry financing. Peter Meeus, the chairman of the Dubai Diamond Exchange (DDE) said it was encouraging to see large number of Indian and Dubai based banks entering the diamond financing business. Further, apart from NBF, two more prominent banks Emirates NBD and Mashreq assured backing the emirate’s emerging position as a major player in the diamond business in the conference.
Though the industry’s financing woes has not yet been eradicated, improved diamond financing led by banks like NBF, IndusInd et al will hopefully alleviate the scenario.