BBVA, Spain’s leading bank, has proffered a syndicated loan worth $150 million over the Ethereum blockchain.
The loan was provided to Spain’s national electrical grid operator, Red Electrica, where the terms of the loan were recorded on Ethereum public blockchain.
A syndicated loan is one where a group of banks comes together to lend to a single entity and in this case, the lenders were BBVA, Mitsubishi UFJ Financial group along with BNP Paribas.
In order to opt the modernistic approach against the conventional syndicated manual slipped up loan process, where the banks have to count on faxes to share complex information, which not only delays the process but is also expensive. As blockchain is perceived as a medium to aid banks exchange information at near real-time, which not only shrink the loan process from a couple of weeks to a day or two together with the less operational cost.
With blockchain, the data for the loan will be time-stamped at each stage of the process. The loan agreement signed between the three banks and recorded on the Ethereum blockchain, upholding its “authenticity,”
In the continuation of BBVA’s attempt to explore blockchain technology and the potential related opportunities, the body is now further planning to oversee on various other blockchain projects as well for the syndicated loans in the future.
Ricardo Laiseca BBVA’s global finance head, BBVA, noted that:
“The latest blockchain-related initiative by the bank is a part of the company’s attempt to provide corporate clients with “the most innovative financing solutions.”
Also, while commenting on the positive aspects of blockchain tech BBVA’s chairman Francisco Gonzalez Rodriguez in mid-September said that “blockchain technology is perfect, and provides big, big tools. Although, cryptocurrencies that are based on blockchain technology are often used for bad purposes and must be understood.”
Earlier this year in April, while focusing on both a private digital ledger and the public Ethereum blockchain BBVA carried out another pilot project and supplied $91 million corporate loan.