Banco Santander, a Spanish multinational commercial bank and financial services company has announced that it has issued the first end-to-end blockchain bond. The bank issued the bond directly on blockchain and the bond will also continue to exist only on the blockchain.
Notably, Santander is the 14th largest banking institution in the world as of August 2019. This blockchain bond is seemed as a first step towards a potential secondary market for mainstream security tokens in the future.
José García Cantera, CFO at Banco Santander, said “Santander is at forefront of the profound digital transformation of the financial sector and this transaction is one example”
Detailed of Blockchain Bond
Banco Santander was itself the issuer of the $20 million bond, meanwhile one of the Group’s units purchased the bond at the set market price. The bond carried a quarterly coupon of 1,98%. The bank used the public Ethereum blockchain to complete the transaction. This allowed Santander to achieve the milestone of tokenizing the bond securely and registering it in a permissioned manner on the blockchain.
We want to take advantage of any technology that can accelerate that process, so that our customers thrive and be faster and more efficient, and blockchain is one of those technologies.” added José García Cantera.
The cash used to complete the investment and the quarterly coupons have also been tokenised, i.e., represented digitally on the blockchain. The automation has reduced the number of intermediaries required in the process, making the transaction faster, more efficient and simpler.