Standard Chartered Requests Loan Protection from Diamond Clients

London-based bank Standard Chartered Plc is requesting greater loan protection from clients operating in the Belgian and Indian diamond trade to decrease lending risks and increase collateral. The bank has loaned around USD 2 billion to the diamond industry, and is now asking clients to provide either 100% collateral or payment insurance for diamond-processing. The global diamond jewelry market is expected to grow at a CAGR of 3.19% by 2019, according to a report available from Research and Markets, but this growth could be lower if diamond trade businesses are unable to acquire the loans they need to secure and process gemstones.

Greater loan protection is just one of a number of new policies introduced by Chief Executive Officer Bill Winters, who joined Standard Chartered at a time when the bank was suffering from poor lending decisions made during the commodity boom. Winters aims to restructure or jettison around USD 100 billion of the bank's assets. Standard Chartered is one of the biggest lending institutions in the midstream sector of the diamond industry, a sector dominated by family-owned firms specializing in the cutting, polishing and trading of diamonds.

Restricting loans to only those who meet the criteria could affect other areas of the diamond industry. The diamond mining industry is predicted to grow at a CAGR of 5% by 2019, as forecast in an industry report. However, this forecast could be lower if diamond-processing businesses are unable to obtain the loans needed to buy minerals from the mining companies.   

The global gems and jewelry market will be worth USD 292 billion by 2019, as noted in a recent market report, but this value could be lower if Standard Chartered's loan requirements are adopted by other lenders working in this industry.

- Research and Markets