Banco Santander has recently announced the first blockchain bond issue from start to finish. The bonds issued by the bank will exist only in the blockchain, which is a first step for a possible secondary market for tokenized securities in the future.
Banco Santander has been the issuer of the 20 million dollar bond, while one of the Group's units has purchased it at market price, with a quarterly coupon of 1,98%.
On the other hand, Santander Securities Services has been in charge of tokenization and is the custodian of the encryption keys. Likewise, Santander Corporate and Investment Banking (CIB), the global division of the bank that serves corporate and institutional clients, has led the issuance, after advancing in a work that started the Santander blockchain laboratory in the year 2016.
For this first issue, Santander has used Ethereum's public blockchain. This has allowed the bank to tokenize the bond securely and allow it to be allowed in the blockchain. The cash used to complete the investment (delivery against payment in blockchain) and the quarterly coupon have also been tokenized, that is, they have been digitally represented on the blockchain.
Thanks to the automation of the bond, which has a year of expiration, the number of regular intermediaries in these processes has been reduced, which has allowed a faster, more efficient and simple operation. The objective of Santander CIB is to collaborate with the most innovative clients and move from the project stage to product development.
José García Cantera, CFO of Banco Santander, said:
“Santander is at the forefront in the process of deep digital transformation of the financial sector and this operation is an example. We want to take advantage of any technology that accelerates that process so that our clients progress and are faster and more efficient, and the blockchain is one of those technologies. ”
For his part, José María Linares, global head of Santander Corporate & Investment Banking, said: “Our clients increasingly demand the best ideas and technologies to help them in their capital raising efforts. This bond issued with blockchain puts Santander at the forefront of innovation in capital markets and demonstrates to our clients that we are the best partner to help them in their digital transformation. ”
For this project, Santander received support from Nivaura, a London-based regulated fintech that develops innovative solutions that digitize and automate key processes in capital markets; The legal advice was received from the global law firm Allen & Overy.