Yesterday Russia’s Sberbank announced that it had joined the komgo blockchain trade finance network. According to Sberbank, its Swiss subsidiary has financed more than $5 billion in commodity trades to date.
Komgo specializes in commodity trade finance, initially letters of credit for oil. Since the first transaction in late 2018, it has processed well over a billion dollars of trades. Ten global banks founded the company, alongside commodity traders and oil majors. Since then, it added three more shareholders in blockchain developer ConsenSys, oil company Total, and another un-named shareholder.
Given Russia’s importance for commodity trading and oil and gas in particular, Sberbank is potentially an important addition for komgo. We believe Sberbank is a member rather than a shareholder, similar to SMBC, which joined two months ago.
Blockchain networks always like to talk about coopetition rather than competition. But komgo overlaps with the Contour letter of credit blockchain to a significant extent. While komgo is based in one major commodities hub, Geneva, Contour is based in another, Singapore. Komgo’s laser focus on commodities is an advantage given it already has deep connections to the sector with oil major and commodity trader investors plus its close relationship with VAKT, the oil post trade blockchain.
And komgo’s association with ConsenSys may also be an advantage given that ConsenSys is the technology partner of Covantis, the blockchain consortium backed by the world’s largest agribusiness firms. ConsenSys isn’t just a partner of komgo, it’s also a shareholder and has board representation.
Sberbank already has significant blockchain interests across payments, bond issuance and trade finance. Last year it ran a blockchain trade finance trial for Siberian oil with commodity trader Trafigura. It was one of the first firms to be involved in bonds issued using blockchain well over two years ago. And more recently, it was involved in tokenizing travel agent payments to the S7 airline.