By Stanley Pignal
The Financial Times
The diamond industry is set to be the latest to be bailed out by the Belgian authorities as a group of banks agreed to fund a €1bn credit facility for gem dealers.
The banks have agreed to take diamonds as collateral if the government alters lending rules to allow them to take the gems on to their books.
The money, part of a package to encourage banks to resume lending to the sector, is needed "to restore confidence in the diamond trade", said Freddy Hanard, head of the Antwerp gem association.
The Belgian capital's gem industry has asked the Flemish regional government for a €200m ($275m, £176m) temporary guarantee to underwrite the scheme. The city's 1,800 diamond dealers are struggling amid a 30 per cent slump in sales volumes and a decline in prices, in spite of moves from mining groups to limit production.
Many dealers are facing liquidity problems because they are unwilling to sell at a loss gems bought at the height of the market in 2008. They have seen their credit lines withdrawn after banks questioned the value of the unpaid invoices they usually use as security against loans. Using gems as collateral would give Antwerp's dealers an entirely new source of credit....(Click for remainder.)
The Financial Times
The diamond industry is set to be the latest to be bailed out by the Belgian authorities as a group of banks agreed to fund a €1bn credit facility for gem dealers.
The banks have agreed to take diamonds as collateral if the government alters lending rules to allow them to take the gems on to their books.
The money, part of a package to encourage banks to resume lending to the sector, is needed "to restore confidence in the diamond trade", said Freddy Hanard, head of the Antwerp gem association.
The Belgian capital's gem industry has asked the Flemish regional government for a €200m ($275m, £176m) temporary guarantee to underwrite the scheme. The city's 1,800 diamond dealers are struggling amid a 30 per cent slump in sales volumes and a decline in prices, in spite of moves from mining groups to limit production.
Many dealers are facing liquidity problems because they are unwilling to sell at a loss gems bought at the height of the market in 2008. They have seen their credit lines withdrawn after banks questioned the value of the unpaid invoices they usually use as security against loans. Using gems as collateral would give Antwerp's dealers an entirely new source of credit....(Click for remainder.)
