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Spain Bank BBVA Announces $150 Million Syndicated Loan on Blockchain

Spanish banking behemoth BBVA has announced it has completed a pilot test of a syndicated loan through a DLT system, according to a report from Financial Times.

The report states that the Spanish bank organized the loan for Red Electrica, the national grid operator and the biggest electricity distribution company in the country.

BBVA organized the syndicated loan through two other banks namely Mitsubishi UFJ Financial Group and Paribas from France. The loan was agreed by these three banks and then recorded on the Ethereum blockchain to make the transaction immutable.

A syndicated loan is when a number of banks team up to lend money to one borrower, usually a big company itself. Since syndicated loans normally involve significant funds, the data for the loan was time-stamped at each step of the process.

Traditionally, banks rely on centralized records for complex information like a syndicated loan. They normally involve fax papers which is not only slow but also expensive and inefficient. Blockchain has been touted as a major disruption technology for banking circles which are most affected by these outdated technologies. It can also lower the transaction times from two weeks to one or two days while reducing operational costs.

BBVA, buoyed by the recent success of a blockchain-based syndicated loan process, is now investing more into DLT and will look to process more loans like that in the future. This is not the first time the bank has issued a blockchain-recorded loan. In April, a USD 91 million sum was approved for corporate clients and recorded on the Ethereum blockchain for safe-keeping.

 

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