Basel II for Diamonds Package Released

In the wake of Basel II, banks are being forced to ensure that the companies they finance have a good risk profile. This means that companies, even those in the diamond industry, have to manage their risks effectively to keep themselves in good standing with their financial institution.   

“Basel II is forcing not only banks, but also companies, to understand and identify all of their risks and manage them more effectively. This will mean ensuring sufficient equity to cushion them against adverse conditions,” says professor Bart Baesens of the Faculty of Economics and Applied Economics at the Catholic University of Leuven, Belgium, who is also a lecturer on Basel II.

Jeremy Sulzbacher, editor of Diamond Finance, who recently announced the launch of an international banking product designed to help diamond companies evaluate and improve their risk profiles, said, “now is a critical time for diamond companies as the 31 December 2007 financials will be critical to their 2008 risk ratings. In 3 months’ time it will be too late.”

The Basel II for Diamonds package was prepared by diamond bankers and CFOs to help ensure that a company’s bad risk profile will not harm them by resulting in higher capital requirements or higher interest rates. It works to evaluate the risk of the company and help to improve their balance sheets to meet the banks’ technical requirements.