INSUBCONTINENT EXCLUSIVE:
By Elizabeth Burden and Thomas BiesheuvelUnion Bank of India is pulling out of the global diamond hub of Antwerp, joining a retreat of
lenders from the industry, which has been hit by fraud and bad debt.
The bank has given notice that it will close its branch in the Belgian
Western banks have led the retreat in recent years, with Antwerp Diamond Bank and Standard Chartered Plc pulling out of lending
fraud.
In February, Nirav Modi and Mehul Choksi were implicated in an alleged $2 billion fraud involving the use of fake guarantees from
Diamond tycoon Modi and his uncle Choksi deny any wrongdoing.
The diamond midstream, dominated by Indian and Jewish family businesses, makes
up the invisible link between African mines and jewelry stores in New York, London and Hong Kong
The companies are heavily dependent on trade finance to buy rough stones, yet that money is drying up
The industry is now being hit by Indian banks cutting back on their foreign operations due to issues with bad loans.
Total lending to the
midstream has fallen from $16 billion in 2013 to just over $13 billion last year and is forecast to drop below $11 billion in the next
couple of years, according to Dfin, a London-based corporate finance firm specializing in the diamond sector.
Union Bank started operating
in Antwerp four years ago, when it said it would dedicate a fifth of its $200 million loan book to diamonds in the first year
stones by carat from the Asian country, according to the Antwerp World Diamond Center.
