Standard Chartered won’t fund diamond business

Standard Chartered said on Tuesday that it will stop financing diamond firms as part of a review of its exposure to risky sectors.

The business, which comprises around $2 billion in loans to so called midstream diamond and jewellery firms which trade and polish the precious commodities, would be shut down.

“Continuing to provide financing to the midstream diamond and jewellery segment falls outside of the bank's tightened risk tolerances. We are working with clients to ensure a smooth exit,” said a spokesman for the bank.

Banks in some of the biggest diamond and jewellery markets such as India have reined in lending in the last two years, fearing defaults amid greater regulatory scrutiny of the sector.

Sources said in January that banks including Standard Chartered, SBI, IDBI Bank and ABN Amro had become cautious over their exposure to the jewellery sector.