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Stanchart Closes Diamond Financing Unit on Risk Fears

STANDARD Chartered (Stanchart) is exiting its $2bn diamond financing business because it does not comply with stricter lending standards set by CEO Bill Winters.

From: einnews.comDate: 2016-07-18 06:26:22Views: 341

STANDARD Chartered (Stanchart) is exiting its $2bn diamond financing business because it does not comply with stricter lending standards set by CEO Bill Winters.

The unit was placed under review this year, and initially Stanchart was demanding more loan protection from clients in the predominantly Indian and Belgian diamond trade, such as payment insurance or 100% collateral, people familiar with the moves said in March.

The bank has since determined the division is no longer viable amid increased compliance reporting and regulatory capital costs.

"When we announced our new strategy, we said we would look to exit businesses that were nonperforming or that did not meet our new risk profile," spokesman Simon Kutner said.

"It has been concluded that continuing to provide financing to the midstream diamond and jewelry segment falls outside of the bank’s tightened risk tolerances. We are working with clients to ensure a smooth exit."

During his first year in charge, Winters has conducted a root-and-branch review of the embattled bank, which reported its first annual loss since 1989 after growth slowed in its main Asian markets and about $4bn of loans went bad.

Winters has put $20bn of risky assets up for sale, pared back commodity lending and replaced almost all of the firm’s senior executives. He has also tightened conduct rules and castigated managers after discovering some were ignoring expense and outside business policies for personal gain.

Diamonds are not a huge part of Standard Chartered’s balance sheet, accounting for less than 1% of its $261bn of loans.

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