Union Bank Of India Opens Branch In Antwerp

(IDEX Online) – The Union Bank of India has opened a branch in Antwerp, the world’s biggest trading hub for rough diamonds, giving the Belgian city a much-needed new lender.

That increases to five the number of Indian banks active in Belgium, the country’s central bank said.

The Antwerp office, located in the diamond district, will allocate 20 percent of its $200 million loan book to the diamond business in the first year, Union Bank Chairman Arun Tiwari told Bloomberg News. It will also undertake trade finance, remittances and syndicated loans.

“We have been doing diamond business for many number of decades back in India,” Tiwari said. “Since we are in Antwerp we will be doing diamond business as well” as lending to companies in other industries.

The diamond industry globally needs more banks to help spread the risk of funding diamond transactions and to ensure more competition and choice.

Bank financing of the diamond industry was one of the main issues discussed by the presidents of the World Federation of Diamond Bourses and the International Diamond Manufacturers Association at the 36^th World Diamond Congress in Antwerp last week.

Among the most prominent lenders to the diamond industry are State Bank of India, ABN Amro, Antwerp Diamond Bank and Standard Chartered.

Antwerp, handles about 80 percent of the world’s rough diamonds, has strong trade links with India and imports most of its polished stones by carat from the Asian country, according to the Antwerp World Diamond Center.

Erik Jens, Chief Executive Officer at ABN Amro’s International Diamond & Jewellery Group, said he sees the diamond industry globally attracting other new banks this year as the balance between risk and return improves. He predicts increasing interest in consortium banking, or “club” deals, where several banks finance a borrower’s needs.

“I see interest coming in,” Jens said. “I see banks coming up with policy papers internally to do diamond deals. I see it in Africa; I see it in the Middle East,” he told Bloomberg.

Diamond companies have faced tightened lending as regulators have pushed banks to increase the capital they must hold to absorb possible losses on their investments. The Basel rules include changes to how banks should weigh the riskiness of their assets, to make such assessments more conservative.

ABN Amro, one of the top four lenders to the industry, last year was the first to demand that clients put up more of their own money for gem purchases, cutting the amount it lends to 70 percent of purchases from 100 percent. Antwerp Diamond Bank, the KBC Groep NV (KBC) unit being sold to Yinren Group of China, also reduced its financing to 70 percent.