Spanish Bank Issues Syndicated Loan On Blockchain
The Spanish bank BBVA, together with the partners, issued the first syndicated loan on blockchain, Financial Times reports.
Several organizations have demonstrated how the technology behind cryptocurrencies can reduce transaction time in the market with trillions of dollars in circulation.
BBVA used a private blockchain to work with the banks — the Japanese MUFG and the French BNP Paribas, to issue a syndicated loan in the amount of $150 mln to the Red Electric energy corporation. The legal advisors Linklaters and Herbert Smith Freehills also had access to the blockchain system. The technology allowed all participants to share data instantly.
All actions and operations were accurately recorded in time, and the network was protected by users’ codes. As soon as the loan agreement was signed, it was given a unique identification number put on the blockchain of Ethereum.
BBVA states that the blockchain helps simplify and speed up the application process for syndicated loans from about 2 weeks to one-two days. Signing and documentation process, which usually take hours, can be performed in minutes.
BBVA plans to proceed with another five to six syndicated loans that will be implemented on blockchain under the pilot project development in the coming months, Ricardo Laiseca, the head of the bank’s global finance department, stated.
As previously reported, the HSBC bank conducted the first blockchain deal with the letter of credit in India.