The second largest bank in Spain has taken out a syndicated loan using the ethereum blockchain to the value of $150 million, reports the Financial times.
The loan was supplied by three Countries including MUFG of Japan, and BNP Paribas of France. The syndicated loan allows the banks to spread the risk and give the loanee a bigger loan.
The $150 million loan was being awarded to Spain's national electricity provider, Electrica. The loan was secured and signed using the ethereum blockchain. Blockchain technology is being tested as a potential viable tool for operations such as these were paper-based systems have been used for years.
The loan was secured within a few days using the new technology whereas the old method normally would take two weeks to complete. Talking to Financial Times, Head of global finance at BBVA, Ricardo Laiseca said the new method reduces the costs for lenders because "everything is automatically recorded by the system, in terms of back office and operational costs.” Laiseca also mentioned that they plan on continuing the pilot with several other loans planned.
Banks are continuously looking into blockchain technology as a potential tool to increase transparency and speed of business with several banks already involved in the space. BNP Paribas has said to be testing an internal blockchain platform within a division of the bank. JPMorgan of New York already operates two blockchains including an ethereum based blockchain called 'Quroum', which will be used to transact gold bars and potentially other metals eventually.
Ultimately, it is just a matter of time before banks are all operating with some sort of blockchain technology.