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Antwerp’s role as the diamond industry’s international business centre has been underscored over the past decade with the entry into the city of a bevy of Indian banks. Their arrival not only emphasises Antwerp’s function as the industry's primary financial services provider, but also the increased share of Indian companies in the city's diamond sector.

 
The Bank of India opened a branch in Antwerp in 2007, while ICICI Bank, India’s largest private bank, made its entry into mainland Europe with the opening of a branch in Antwerp a year earlier. They joined the State Bank of India which was already operating in the city. The latest entrant, opening a branch last year, was Standard Chartered Bank India. The Belgian branch offices aim to attract some of the world's largest diamond firms and offer a variety of corporate banking products.
 
When ICICI made its premiere appearance in the Antwerp market, Belgium’s then-prime minister, Guy Verhofstadt, found the time to attend the official opening. “After China, the U.S. and Switzerland, Belgium is India's largest import partner mainly due to diamonds,” Verhofstadt said. “In Antwerp alone, diamonds have generated 30,000 jobs. So I’m delighted that India’s top diamond companies have decided to establish a foothold in Belgium."
 
ICICI's arrival in late 2006 came at a critical time for the diamond sector, shortly after Belgian bank Dexia announced it was closing down its diamond lending unit in July 2006. At the time, Dexia explained its move by saying that the requirements of the diamond sector and the growing internationalization of the business made it not worthwhile for the bank to continue in the trade.
 
The attitude of the Indian banks was markedly different. Standard Chartered Bank India branch head Kishore Lall told the Antwerp Diamond Symposium in November last year that his bank was optimistic regarding the Antwerp market despite the downturn in sales and demand.
 
A handful of banks populate Antwerp’ diamond district, with the two dominant players, ABN AMRO and Antwerp Diamond Bank, holding a major market share. But there clearly is room for others. Finance in the diamond industry is a problem at the best of times, particularly because of the limited number of financial instruments available to the trade. Bankers typically say that the diamond trade is a relatively simple one to deal with since it is largely about the financing of transactions. And that is all the more the case in Antwerp where a large volume of diamonds worth tens of billions of dollars pass in and out of the city each year.
 
Contrary to a commonly heard claim, it is not simply the number of Indian firms operating in Belgium that has persuaded banks from the sub-continent to start up banking facilities in Antwerp. The city's hugely important role in the worldwide diamond industry is well known, and it is that status as the hub of the rough and polished trading market that provides the basis for the decision by banks to begin operations in the city.
 
The latest figures released by the Antwerp World Diamond Centre show that in 2009 Belgian diamantaires brought into the country 85.6 million carats of rough diamonds with a value of $6.37 billion. Meanwhile, rough exports totaled 96.5 million carats worth $7.40 billion. Similarly, there were 7.35 million carats of polished diamond imports in 2009 worth $7.95 billion, while exports were 7.28 million carats with a financial value of $8.63 billion. That gives a turnover of $30.3 billion, a huge sum, but well below the $45.6 billion turnover achieved in 2008. Nonetheless, it provides an indication of the large amounts of finance needed by Antwerp diamond companies.
 
And that is the attraction for bankers from India and elsewhere, according to P.K. Tataria, manager of the Bank of India branch in Antwerp. Some diamantaires have suggested that Indian banks have expanded into Antwerp and elsewhere simply because the Mumbai market is saturated and thus need to find opportunities elsewhere. Tataria completely rejects the claims, however.
 
"Mumbai is not saturated, there are definitely many opportunities there," Tataria said. "But that is not the reason that the Bank of India is involved in the Antwerp market. Since the major rough market is based here and we are a bank that is interested in the diamond market, then we have to be here. But there is another factor, and that is that operating in Antwerp puts the bank in a better position to understand what is happening in the diamond business in the city and in the rest of the world. That provides valuable feedback that you can provide to headquarters in India. That, in turn, allows the bank to make adjustments, if needed, to strategy.
 
"The Bank of India was the first to enter the diamond industry more than 50 years ago so this is an industry we know extremely well,” Tataria continued. “Although we opened the branch in Antwerp in 2007, we had been weighing up a decision for several years before that. We were influenced to some extent by the large number of Indian firms in Antwerp. Because the Bank of India is very well known to Indian diamond merchants, that made it easier to open a branch here."
 
Tataria said, however, that Antwerp firms are not necessarily tied to counterparts in India and that the bank makes a separate assessment of the firm. "We have a good mix of Indian and Belgian companies and we are not over-reliant on Indian companies," he said. "There are many good merchants in Antwerp, and the bank's only concern is how comfortable it feels with the diamond sector. The diamond business is limited compared to other firms so you have to decide how much risk you want to take. We are very comfortable with the diamond sector."
 
Meanwhile, P.N. Prasad, the managing director of the State Bank of India's Antwerp branch, said: "We have a high percentage of Indian customers. We know them well from India in many cases through working with our branch in Mumbai. We would like to attract more non-Indian firms. We have been operating in Antwerp for 26 years and have had good results. But having reached that critical level, we would like to expand in the sector. We have been here a long time and we intend to stay here for a long time to come and so we are expanding our business."
 
From a diamond banker's perspective, Antwerp is a special case due to its nature as a huge trading centre meaning large volumes of money are needed to finance transactions. That also raises the risk level for the banks, however that is not seen as a problem for one banking official. "We have not seen defaults in Antwerp so that gives us encouragement. We also see that the commitment of the Antwerp diamond firms and their discipline is high. Higher than we see in some other centres, and so that is also an advantage of doing business here."
 
His comments were echoed by Prasad, who said the "delinquency rate" of payments in Antwerp as the industry emerges from the global slowdown was low. "The recovery in Antwerp has been better than in other centres," Prasad said.
 
Meanwhile, Tataria said the Antwerp trade is located at a point in the diamond pipeline between mines and polished goods where defaults are less likely to happen. He said the Bank of India had been keeping business activity at a "medium" pace over the past year as it waited to see the direction the global economy would take. "In the last two to three months, we have been increasing our business as we have seen more applications from companies for credit. We cannot be in a stagnant position so we have to increase our business. We are in this business for the long term not the short-term so we are looking to expand our activities."