The loan portfolio and activities of Antwerp Diamond Bank (ADB) eventually will be “run down”, according to the bank’s parent company, Belgian-based banking and insurance group KBC. The decision, which is subject to approval by the competent authorities, was made after the collapsed sale of ADB to Chinese diamond business Yinren Group.
An official KBC release stated that no new loans or business would be conducted through ADB and that it would “absorb” outstanding loans through KBC Bank NV.
The closure of the bank is said to be in accordance with an arrangement that the group made with the European Commission in 2009. Under the agreement, KBC received financial aid during the global financial crisis on the condition of divesting ADB.
“Over time, therefore, the activities, portfolio and the legal entity of ADB will be removed entirely from KBC's scope,” the release added.
The bank, which deals exclusively with the loose diamond and diamond jewellery sector, would be contacting its clients over the next few months to “personally work out the practicalities”.
There’s still hope
Although plans to close ADB have been outlined, the statement noted that KBC would “examine any valid and acceptable proposal which does not lead to any additional financial burden to acquire part or all of the activities of ADB or its loan portfolio”.
Responding to the announcement, the Antwerp World Diamond Centre (AWDC) indicated that there was a possibility the bank could remain open.
“There is still room to find a solution, to keep the financing levels of the Antwerp diamond sector at market confirm levels,” AWDC spokesperson Margaux Donckier said.
According to AWDC – an organisation that aims to support the Antwerp diamond sector – about one third of Antwerp diamond dealers are currently financed by the ADB, including small- and medium-sized diamond businesses that would find it challenging to find alternative sources of financing.
KBC admitted that finding a buyer for the bank “turned out to be a real challenge”. The company extended its divestment deadline twice and spoke with more than one hundred potentially interested parties before settling on an agreement with the Yinren Group last year.
ADB CEO Pierre de Bosccher attributed the bank’s “specific niche business” as being the main reason for the challenging divestment, however, the difficult economic and market environment were also said to have been factors.
ADB was established in 1934 and is said to be the second largest diamond bank in the world, with branches in Antwerp, Dubai, Hong Kong and Mumbai.