DIAMONDS TO SHINE AGAIN

ANTWERP

DIAMONDS TO SHINE AGAIN

THE RECESSION HAS HIT THE DIAMOND trade hard, but an innovative scheme from Antwerp is being tipped to boost liquidity in the industry, as Philip Claes of the Antwerp World Diamond Centre (AWDC) explains.

“The only guarantee a diamond dealer can offer are his receivables – what other clients owe him,” he says. “But at the moment there are questions about those receivables, so banks have been reluctant to lend. We’ve been working with the banks in Antwerp to solve this problem, and we saw that a diamond dealer has other guarantees to offer, namely his stocks.”

Under the new plans, dealers would be able to have their stock independently valued by the AWDC and could use it as security for borrowing. The Belgian banks are on board and have promised to make €1bn (£850m) of financing available on two conditions. First, the Belgian Banking, Finance and Insurance Commission must give its blessing to the new arrangement. And second, the Flemish government must give a guarantee of €200m (£170m) to the banks to cover them against a further collapse of the market.

“It’s bad now, but we hope that by the end of 2010 we’ll be back at the same level we had at the end of 2008,” says Claes. “The future will tell if we’re right or wrong.”

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