Its “Her-ology” report highlights trends in the women’s luxury watch market, from top brands to movement preferences.
Why Standard Chartered Shut Down Its Diamond Unit
The mid-stream sector of the diamond industry now “falls outside of the bank’s tightened risk tolerances,” the London-based lender said.
London--Standard Chartered Plc no longer will finance diamond traders and polishers after reevaluating its portfolio and determining there is too much risk for too little return in the sector.
The London-based bank began thoroughly reviewing all of its operations after CEO Bill Winters took over last year, looking to exit businesses generating low returns and/or that are vulnerable to large swings in loan impairment.
The trading and polishing sector of the diamond industry was certainly among those in Winters’ crosshairs, with the spike in defaults and bankruptcies last year--the bank was among those caught up in the massive Winsome Diamonds default--and the increased compliance reporting and regulatory capital costs associated with financing the industry.
In March, the London-based bank began to pull back, tightening its terms for lending to the diamond sector by asking dealers to provide more collateral or take out insurance protection on their loans.
Then, last week, JCKOnline.com broke the news that Standard Chartered would be exiting the diamond sector entirely.
In an official statement, the bank said that continuing to provide financing to diamond traders and polishers “falls outside of the bank’s tightened risk tolerances.”
A Standard Chartered spokesman added that it will still bank the mining and retail segments of the supply chain; its decision impacts only the mid-stream, meaning diamond traders and polishers.
A timeline for Standard’s shutdown of its diamond division has not yet been determined, though the bank said it is “working with clients to ensure a smooth exit.”
Eric Tunis, a partner at New York-based accounting and consulting firm Friedman LLP, said the news that Standard Chartered would no longer bank the diamond sector “wasn’t something that was shocking.”
There have been a number of warning signs, including the tightened lending restrictions and, very recently, the bank’s absence from the Las Vegas trade shows. Tunis said this is the first time he can recall not seeing anyone from Standard Chartered in Vegas.
He said the struggle with profitability among diamond manufacturers leading to loan defaults in the mid-stream, the slim margins banks now make when lending to diamond companies, and the general lack of robustness in the trade right now all make banks averse to financing it.
Friedman Co-Managing Partner Harriet Greenberg said compliance issues also are a factor.
Larger money center banks face hefty fines if it’s found that their clients are involved in money laundering, a practice many perceive to be rampant in the diamond industry.
“There’s a
“A lot of it is perception more than reality,” Greenberg said, noting that her firm’s clients, and many companies in the industry, have diligent quality control procedures in place.
The exit of Standard Chartered set off alarm bells around the industry, which has seen a number of banks pull back, and even pull out, in recent years.
Antwerp Diamond Bank is no more. Parent company KBC wound down its operations in 2014 after it is said it couldn’t find a buyer for the bank, though questions loom about the failed sale.
Dutch bank ABN Amro still lends to the mid-stream sector of the market, though sources in the diamond market say the bank has pulled back in recent years.
When asked to comment on Standard Chartered’s decision, Erik Jens, who heads the ABN Amro’s diamond and jewelry division, said he cannot comment on another bank’s strategy.
He noted, however, that in general banks “make risk adjusted return trade-offs on where to allocate capital. As for the diamond industry, we know that reputation and transparency still plays a role in those trade-offs, although we see the many initiatives of the industry to improve its image by self-regulation as well.
“In our opinion, for strong, corporate structured companies with a healthy balance sheet, a sustainable strategy and business plan and long-term potential and profitability, there is enough liquidity from several banks active in the sector, even attracting newcomers, including investors, in Europe, Asia, the U.S.A. and the Middle East.”
Greenberg said the exit of traditional lenders, like Standard Chartered and ADB before it, opens the door for non-bank players, such as hedge funds, to enter the sector and offer financial services.
“Anytime there’s a void, there’s an opportunity,” she said.
The Latest
The smoked heirloom tomato mezcal martini, only available at Adalina in Chicago, is served with a 9-carat diamond tennis necklace.
Scheduled for Sept. 25, the online-only event will be open to non-AGS members this year, for a fee.
Growing your Instagram following organically is more important than ever in today's technological environment.
The organization, which was started by the International Colored Gemstone Association, is now a 501(c)(3).
The Gemvision founder is remembered as a passionate mentor with a deep love for God.
The “Golden Hour” collection was designed to “inspire and encourage reflection,” said the brand.
Supplier Spotlight Sponsored by GIA.
The jewelry historian discusses the history and cultural significance of jewelry throughout time and across the globe.
Bonhams will offer more than 70 pieces of the late dignitary’s jewelry next month.
The “Love, Unleashed” campaign is an ode to love, featuring 16 new designs from Hearts On Fire’s “Vela” collection.
The miner’s new peridot cut will debut at the upcoming Hong Kong jewelry trade show.
It’s showtime for these jewels, inspired by the motifs and color palette of the new Tim Burton film.
CEO Efraim Grinberg pointed to a challenging consumer spending environment, particularly in the watch category.
Inspired by a 19th century sculpture, Mandler transformed gold into liquid for these earrings.
The model and entrepreneur stars in two new Chopard campaigns.
Members of the founding family partnered with Mexican retail company El Puerto de Liverpool to possibly take Nordstrom private.
The iconic design has joined a lineup of notable pieces featured in the jeweler’s “With Love, Since 1837” campaign.
Ralph Simons is now CEO of the jewelry brand started by fashion designer Michal Kadar and her husband, Avraham Kadar, in 2015.
Jen Cullen Williams and Duvall O’Steen say it’s all about giving your social media feeds a human touch.
The models and friends of founder and artistic designer Valérie Messika showcase the brand’s jewelry in the “Back to Icons” campaign.
“From Italy, With Love” will showcase Roberto Coin, Marco Bicego, and other Italian brands.
The jewelry retailer will also have a diamond-set tennis racket on display at the tournament.
The retailer has moved into a 3,200-square-foot space at The Shops of Highland Park.
The month’s birthstone is vibrant in every color.
The special editions of the Premier, Navitimer, and Chronomat are equipped with a new perpetual calendar movement from the brand.
Fly away with designer Katey Brunini’s butterfly ring, as its spring-loaded wings flutter above your fingers.