The Israel Diamond Exchange (IDE) pledged to contest a decision by First International Bank of Israel (FIBI) to tighten its lending standards for the trade.
FIBI raised collateral requirements for the diamond industry, prompting IDE president Yoram Dvash to write to bourse members, vowing to lobby state authorities and persuade the bank to retreat. Dvash claimed FIBI’s demands are stricter than those applicable to other sectors and alleged the move was influenced by “pressure” from Israel’s financial regulator.
The IDE will hold an emergency meeting after its members return from summer vacation this month and also invite public figures from politics and business to participate in the discussion. The bourse re-opens August 28.
FIBI “has changed its policy, and what’s even worse from our point of view is that the pressure for this came from the Supervisor of Banks unit at the Bank of Israel,” Dvash said in the letter. “It is not possible for a unilateral decision to be passed without a battle.”
FIBI’s policy change comes at an increasingly challenging time for borrowers, with key lender Standard Chartered exiting the diamond industryearlier this year. Antwerp Diamond Bank and Israel’s Bank Leumi have also left the business in recent years.
The IDE has set up a committee to challenge FIBI’s decisions, with senior bourse officials “walking the corridors of the Knesset [parliament] and the government to create a strong political lobby.”
Dvash (pictured) said bourse representatives have been invited to meetings with Hedva Ber, the Supervisor of Banks, and Karnit Flug, the Governor of the Bank of Israel.
“All bank CEOs and regulators know diamantaires are a vital part of Israeli industry and for the country’s banks,” Dvash continued. “Our business is stable and good, and no backward attitudes or agenda will create a bad situation for us.”
FIBI declined to comment on specifics of its policy change but a spokesperson said the bank “continues to give credit to the diamond sector through its branch at the diamond center at Ramat Gan.” The bank lends with the “caution” required of it, the spokesperson added.
This post was written by StettnerInvestment