Yesterday Brazilian bank Itaú Unibanco and Standard Chartered announced they have partnered to develop a blockchain syndicated loan platform for loans syndicated to a smaller group, called club loans. In a pilot transaction, Itaú raised a $100 million loan syndicated with Standard Chartered and Wells Fargo, according to Reuters.
Arranging syndicated loans is an intensive communication process and can involve thousands of emails. Hence blockchain cuts down the back and forth and means that each party can track each step of the process.
However, while negotiation was conducted on the blockchain, settlement was not, though it could be in the future.
The platform uses R3’s Corda distributed ledger technology (DLT). All three banks are shareholders in R3. Finastra’s syndicated loan platform LenderComm was the first application to go live with R3.
Another R3 shareholder, Spanish bank BBVA, has also been working on syndicated loans. Last month BBVA granted a €150 million to the Spanish electricity grid Red Electrica. The loan was syndicated to Japan’s largest bank, MUFG, and the French international banking group BNP Paribas. However, this project used Hyperledger Fabric technology.
New York startup Symbiont is working on a syndicated loans platform with Ipreo, now part of the IHS Markit information provider group.
Other blockchain activities
Standard Chartered is involved in a broad array of blockchain projects. In the UAE it’s partnering with Siemens Financial Services for blockchain-based bank guarantees for trade finance. The bank is also involved in the Voltron Letter of Credit blockchain initiative which is an R3 Corda project. Plus it’s part of Marco Polo, the other major R3 trade finance platform. Also in trade finance, Standard Chartered is one of the founding members of the Hong Kong Monetary Authority platform eTradeConnect.
Last year the bank experimented with AIG and IBM for smart contract insurance.
Additionally, Standard Chartered invested in Ripple and is one of the banks in the RippleNet payment network. Announced in May, it’s involved in a pilot payments test in Singapore and Thailand.
Itaú is also a RippleNet participant. Plus it’s been involved in a blockchain-based OTC derivatives platform.