Antwerp Banks Okay Diamonds As Collateral

Due to the downturn in the economy the diamond industry has been hit, including the world’s most renowned diamond trading center, Antwerp. The Antwerp World Diamond Center (AWDC), which is the official representative of the Antwerp diamond sector has reached agreement with  Antwerp banks to accept diamonds as collateral .The deal was announced on Tuesday the 19th of May, during the visit of Kris Peeters, the leader of the Flemish Government  to the AWDC.Other issues discussed was the support and cooperation by the Flemish government for the diamond sector.

This deal is to provide temporary funding to support the Antwerp diamond dealers. Up to 1 billion euros ($1.36 billion) will be created by banks as credit facility for a period of two years  in exchange for diamonds as collateral.

The main banks that signed the agreement include the Antwerp Diamond Bank, Dutch State Controlled Bank ABN Amro, State Bank of India, Bank of India and India’s ICICI Bank.

In order to secure the position of the banks, the AWDC will be in charge of the valuation of the diamonds for the banks. This deal will still need approval by the Belgian banking and finance regulator.

Antwerp has over 1,800 registered diamond traders who have been affected badly due to the global financial meltdown.  According to Guardian UK, Import of polished diamonds to Antwerp has reduced by 32 percent and exports by 28 percent in January to April 2009, compared to 2008.

The Flemish government was also considering a request by the diamond sector to provide US$ 272 million as a temporary guarantee.

“This action confirms the leadership of the Antwerp diamond sector in these trying times and will allow Antwerp to reaffirm and strengthen its position as leading diamond center, allowing the center to maintain its current employment rate. Additional funds will benefit all stakeholders of the diamond sector — diamond dealers, banks and mining companies — and will restore the confidence in the diamond trade,” concluded Freddy J. Hanard, chief executive officer (CEO) of AWDC.

The Antwerp Diamond sector is said to provide over 34000 jobs directly and indirectly. Over 50% of polished diamonds and 80% of rough diamonds worldwide pass through Antwerp.

Leave a Reply

Your email address will not be published. Required fields are marked *