The Israel Diamond Exchange (IDE) pledged to fight a decision by the First International Bank of Israel (FIBI) to tighten its lending standards for the trade. FIBI raised collateral requirements for diamond industry members, leading IDE President Yoram Dvash to write to bourse members, vowing to lobby state authorities and persuade the bank to reconsider the decision. 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, Rapaport reported.
The IDE is to 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 is all the more painful since it comes at an increasingly difficult time for borrowers. Major industry lender Standard Chartered announced earlier this year that it would withdraw from the diamond industry. Antwerp Diamond Bank and Israel’s Bank Leumi have also left the business in recent years. 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.