HSBC announced it completed two blockchain letters of credit (LC) transactions — one between firms in Saudi Arabia and Bahrain, and another between companies in Oman and Abu Dhabi.
For the first LC involving Saudi British Bank (SABB) acted as the issuing bank for Saudi Arabia’s Altaiseer Aluminium Corporation (TALCO), which provided the letter of credit. The transaction involved the shipment of homogenized aluminium billets from Aluminium Bahrain to TALCO. HSBC holds a 29.2% stake in SABB.
“As the world’s leading bank for trade finance, HSBC is actively supporting the adoption of technologies such as blockchain to make global trade faster, safer and simpler,” said Melika Betley, CEO of HSBC Bahrain. “With intraregional trade continuing to grow, we see tremendous potential for blockchain in the GCC [Gulf Cooperation Council].”
The second LC was for the benefit of Oman Oil and Orpic Group. The transaction involved the shipment of polypropylene to the Abu Dhabi National Carpet Factory. The LC was advised by HSBC Oman using the LC blockchain platform previously referred to as Voltron.
In the above transactions, the blockchain LC was able to mirror the traditional process. One of the benefits of blockchain LC’s is the elimination of manual paperwork and associated costs. It also provides the parties with a transparent view of the transaction in real-time, thereby saving time Plus it helps to prevent fraud which is easier to perpetrate with couriered documents.
The LC blockchain is based on R3’s Corda distributed ledger technology (DLT) which powers the consortium blockchain made up of eight global banks including Bangkok Bank, BNP Paribas, CTBC, ING, Natwest, SEB and Standard Chartered. CryptoBLK is the technology partner.
HSBC has carried out several LC transactions in the past few months. Last month, it executed a pilot transaction in Malaysia. The bank had then said it was its eleventh blockchain trade finance transaction.
A few months ago, HSBC used Voltron for its first yuan-denominated LC for a company in Hong Kong.