Italian Regulator Investigates Bank Branches Diamond Sales
November 13, 16(IDEX Online) – An Italian regulator is investigating the sale of diamonds through bank branches across the country after a TV report alleged the stones were missold to the public.
Several Italian banks distributed diamonds for diamond brokers, an unusual partnership that generated around 300 million euros ($333 million) in sales for the brokers last year, according to the Reuters report.
State channel Rai3 said in October that several banks sold diamonds as financial products in bank branches at twice the market price. It also showed a bank official advising a customer to make the investment without spelling out the risks and promising the diamond would appreciate consistently above the inflation rate in the long run.
"We are reassessing the whole subject again to see whether we need to act at a regulatory level or with specific recommendations, if there are gray areas or a regulatory gap we need to fill, or if there have been abuses that need to be referred to judiciary authorities," a Consob spokesman was cited as saying in the Reuters report.
He declined to give any further details of the inquiry, saying it was at an initial stage.
Banks that sold diamonds to their clients include major lenders Intesa Sanpaolo, Unicredit, Ubi Banca, and Banco Popolare.
A spokesman for Intesa Sanpaolo told Reuters that diamonds were sold only to clients with a minimum net worth of 100,000 euros, while declining to comment further. Spokespeople for Banco Popolare, Unicredit and Ubi Banca declined to comment.
The two main diamond brokers operating via the banks are Intermarket Diamond Business (IDB) and Diamond Private Investment (DPI). An IDB spokeswoman said its higher prices reflected the cost of brokerage and other services and that it advised clients to invest only a small portion of their wealth in diamonds and to hold them for the long term, while a spokesman for DPI declined to comment.
Italian consumer groups GloboConsumatori and Aduc say they have received nearly 20 complaints from bank clients who believe they were missold diamonds.