top of page
Laxmi Diamonds.png

ABN Amro slashes lending for rough purchases

ABN Amro has scaled back its financing of rough-diamond purchases, citing a lack of profitability in the manufacturing and trading sectors.

The Dutch bank will only offer credit if the buyer can make money from the rough, its Antwerp branch said in a letter to clients Friday. It called on the trade to show restraint by purchasing rough only when that is the case.

“For some time, we and the industry in general have been flagging concerns regarding the continued lack of profitability across a wide range of goods in the midstream pipeline,” ABN Amro said in the letter, seen by Rapaport News. The lender criticized the practice of buying rough to maintain supply allocations, and argued that the necessary changes to purchasing practices had not occurred despite it making its views known.

Profitability should be determined by “real sales margins for goods sold as soon as possible after the purchase of the rough, without considering credit terms,” it added.

ABN Amro has shrunk its diamond business in recent years. Last year, it closed its diamond and jewelry lending operations in the US and the United Arab Emirates.

“We remain cautious with respect to this market,” Tanja Cuppen, the bank’s chief risk officer, said in an analyst call on May 15 in response to a question about the diamond industry. “It is a market under pressure. You see consolidation, and competition also from ‘artificial’ diamonds. You see pressure on the sector, and we expect that to remain.”

Courtesy - Rapaport News



bottom of page