ABN Amro to clients: we want to know your transactions

Rob Bates

With banks still skittish about lending to the industry, ABN Amro’s diamond and jewelry division, generally considered the industry’s largest lender, has launched a “borrowing base verification program,” an ambitious initiative that could have a huge effect on industry credit.

According to the division’s global head Erik Jens, the program is based on the principle of “know your transaction.” Since banks finance a diamond company’s credit, they underwrite any credit extended by that company to its customers.

Now, his division is going to take a more active role in examining clients’ receivables and will regularly contact clients’ customers to verify outstanding invoices and ensure they will be paid. In other words, ABN Amro will know its clients’ transactions — to a more exacting and in-depth standard than before. While the bank has done this on a case-by-case basis in the past, it will now become more regularized and a standard part of the lending relationship.

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Source JCK Online