Standard Chartered is demanding more loan protection from clients in the Indian and Belgian diamond trade as the bank seeks to tighten standards, according to people with knowledge of the new policy.
Bloomberg News reports that after lending about $2bn to the industry, the bank is asking diamond-processing clients to get payment insurance or provide 100% collateral, said the people, who asked not to be identified as the matter is private.
“We have been working with clients to find mutually beneficial solutions to continue to bank the diamond industry against a backdrop of increased compliance reporting and regulatory capital costs,” Standard Chartered said in an e-mailed response to questions. “We are focused on generating returns which cover our cost of capital and price accordingly in line with the market.”
Though diamonds account for less than 1% of Standard Chartered’s $261bn of loans, gemstones haven’t escaped the scrutiny of Chief Executive Officer Bill Winters, who inherited a bank reeling from poor lending decisions made during the emerging-market and commodity boom.
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