Standard Chartered finds diamonds no longer a bank’s best friend
Standard Chartered said it will stop providing financing to parts of the diamond and jewellery industries as part of a review of its exposure to risky sectors.
Standard Chartered business, which comprises around $2 billion in loans to so called midstream diamond and jewellery companies which trade and polish the precious commodities, would be shut down, the bank confirmed on Tuesday.
“Continuing to provide financing to the midstream diamond and jewellery segment falls outside of the bank’s tightened risk tolerances. We are working with clients to ensure a smooth exit,” said a spokesman for the bank.
Banks in some of the biggest diamond and jewellery markets such as India have reined in lending in the last two years, fearing defaults amid greater regulatory scrutiny of the sector, which has led to a broad credit crunch.
Industry sources told Reuters in January that banks including Standard Chartered, State Bank of India, IDBI Bank Ltd and ABN Amro had become cautious over their exposure to the jewellery sector. (Reporting by Lawrence White; Editing by Alexander Smith)
Standard Chartered Bank was formed in 1969 through the merger of two separate banks, the Standard Bank of British South Africa and the Chartered Bank of India, Australia and China.
These banks had capitalised on the expansion of trade between Europe, Asia and Africa.
The Chartered Bank
The Chartered Bank was founded by James Wilson following the grant of a Royal Charter by Queen Victoria in 1853.
The bank opened in Mumbai (Bombay), Kolkata and Shanghai in 1858, followed by Hong Kong and Singapore in 1859.
The traditional trade was in cotton from Mumbai, indigo and tea from Kolkata, rice from Burma, sugar from Java, tobacco from Sumatra, hemp from Manila and silk from Yokohama.
The bank played a major role in the development of trade with the East following the opening of the Suez Canal in 1869 and the extension of the telegraph to China in 1871.
In 1957 Chartered Bank bought the Eastern Bank, together with the Ionian Bank’s Cyprus Branches and established a presence in the Gulf.
The Standard Bank
The Standard Bank was founded in London in 1862 by John Paterson from the Cape Colony in South Africa, and started business in Port Elizabeth in the following year.
The bank was prominent in financing the development of the diamond fields of Kimberley from the 1870s. It later extended its network further north to the new town of Johannesburg when gold was discovered there in 1886.
The bank expanded in Southern, Central and Eastern Africa and had 600 offices by 1953.
In 1965, it merged with the Bank of West Africa, expanding its operations into Cameroon, Gambia, Ghana, Nigeria and Sierra Leone.
In 1987 Standard Chartered Bank sold its stake in the Standard Bank, which now operates as a separate entity.