Leumi Does Not Want to Finance Rough Diamond Purchases

Leumi Bank of Israel decided to stop financing purchases of rough diamonds. A source at the bank told IDEX Online the bank has no interest to finance diamond stocks, but is continuing to finance diamond sells.

It coincides with a recent industry resolution to curb rough diamond purchases and will most likely encourage it. The diamond industry witnessed speculative diamond purchases that amounted to the hundreds of millions of dollars in the recent past.

In the bank’s view, diamantaires should use their diamond stocks as their own finance working tool.

At this point, it is not clear if Leumi’s decision will be extended to polished diamond purchases or if other banks will follow its lead.

A number of times in the past year, DTC Sightholders picked their allocations, paying the DTC using bank credit, however did not pickup the goods from the bank. This was a step taken by those Sightholders when they faced credit payment problems and preferred to let the bank hold the goods as collateral until a buyer for the goods was found.

At the recent Antwerp symposium, diamond financing banks announced their continued support of the industry, but called on diamond firm owners to manage their finances more conservatively.