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Banco Santander

Blockchain bond is going to be the way forward for raising debt or capital. Spanish banking major Banco Santander has issued a blockchain bond worth $20 million from start to finish. In a statement issued on Thursday, Banco Santander said that the bank had become the first in the world to have issued an end-to-end blockchain bond. Founded in 1857, Banco Santander is the world’s ninth-largest financial services company by revenues at Euros 48.4 billion or $53.4 billion.

The bank, which launched the bond using technology, said that the bond would continue to exist only in the blockchain. The process, the bank added that, is the first step for a possible secondary market for tokenised securities in the future. The Boadilla del Monte-headquartered bank added that the bond was issued directly onto the Ethereum (ETH) blockchain, where it will remain until the end of its one-year maturity. Stressing on the importance of such bonds, the bank said that the process is faster, cheaper and more straightforward than legacy systems

Banco Santander has issued the $20 million bond to itself. One of the Group’s unit has bought the bond at market price, with a quarterly coupon of 1.98%. Santander Securities Services has acted as a tokenisation agent and custodian of the encryption keys.

Santander Corporate and Investment Banking (CIB), the global division of the bank that serves corporate and institutional clients, has led the issue after advancing in a work that started the Santander blockchain laboratory in 2016 with support from London-based FinTech Nivaura, which is backed by Santander InnoVentures.

While the bank claims to have become the first financial institution to have used a public  Ethereum blockchain for the $20 million debt issuance, the World Bank issued a similar blockchain bond with an own version of Ethereum. Besides, French lender Societe Generale (SocGen) had also issued a similar bond earlier this year on the public Ethereum network. However, Santander argues that every part of its bond issuance process was digitized, automated and on-chain. Earlier this year, Russian telecom operator MTS and Sberbank claimed a world-first privately-placed blockchain bond.

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by Priyanka Pani
Senior Regional Correspondent, Middle East and Asia
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