Two European and one Japanese bank one have completed the first blockchain-based syndicated loan.
Together with France’s BNP Paribas and Japan’s Mitsubishi UFJ financial group, Spain’s banking behemoth BBVA used a personal blockchain network in arranging a syndicated loan amounting to US$150 million for grid operator Red Electrica. Initially reported by the financial Times, legal advisers were also granted access to the private blockchain network permitting instant exchange of data among all the parties to the deal.
According to BBVA, the blockchain pilot is proof that distributed ledger technology might transform the syndicated loan business by simplifying and shortening the waiting period from around two weeks to between 24 and 48 hours. The time taken to method documentation and sign the syndicated loans, for example, may be reduced to a few minutes from many hours. In addition, clients can scale back their operating prices since by having the system recording everything automatically, back workplace expenses can be cut significantly.
US$91 Million Corporate Loan
This is not the first time that BBVA is popping to blockchain technology. Earlier this year as CCN reported, the second-largest lender in Spain issued a corporate loan amounting to US$91 million on the blockchain. Similar to in the case of the syndicated loan that it issued put together with different co-lenders, blockchain technology assisted the Spanish bank in reducing the processing time.
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At the time the bank’s chief executive officer, Carlos Torres vila expressed that distributed ledger technology would transform financial services significantly:
“Blockchain can give clear benefits for all sides in the corporate loan market in terms of potency, transparency, security. It’s another example of how disruptive technology may be used to add price to financial services, something that's central to our strategy.”
Ripple vs SWIFT
Last year in April, the Spanish lender also completed a cash transfer transaction between Spain and Mexico using the blockchain technology of Ripple. Then BBVA noted that the successful trial would assist in improving the experiences of its customers in South America where the Spanish banking giant has a important number of subsidiaries by reducing transaction times and enhancing transparency. Over 50 payments denominated in the euro were made from Spain to Mexico throughout the tests.
Besides enhancing transaction speeds, Ripple estimated that the value of money transfer transactions might be reduced by up to 81 when its technology was used compared to the legacy systems such as SWIFT.
Prior to trying out Ripple’s blockchain network, BBVA had also joined the Linux Foundation-led blockchain framework implementation Hyperledger fabric.
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