BBVA Puts $150 Million Syndicated Loan on Ethereum Blockchain
Spanish banking giant BBVA has finished a pilot that place a syndicated loan for $150 million around the ETH blockchain. According to a report from the Financial Times on Wednesday, the bank organized the loan for Red Electrica, Spain’s national electrical grid operator.
A syndicated loan is just one, where a bunch of banks lends together to one borrower. In Cases like This, the BBVA’s co-lenders were Japan’s Mitsubishi UFJ Financial Group and France’s BNP Paribas.
The data for the loan has been time-stamped at every stage of the process. The loan agreement was finally signed between the three banks and recorded on the ethereum blockchain, maintaining its”validity,” says the FT.
In a conventional syndicated loan process, banks rely on faxes to share complex information, which not just guarantees the process, but is also expensive. Blockchain is seen as a means to assist banks exchange information at close real time, cutting back the loan process from a few weeks to a day or two. Cutting out manual processes also slashes operational expenses.
The BBVA reportedly plans to run more blockchain pilots to get syndicated loans in the long run. The bank has, in fact, researched blockchain tech in years past too. Back in April, it finished a pilot which issued a $91 million corporate loan, with both a private electronic ledger and the public ethereum blockchain.