Santander Announces First-ever $20 Million End-to-End Bond on Ethereum

Spanish multinational commercial bank, Banco Santander announced today that it had issued the first-ever end-to-end bond on the Ethereum blockchain. The bank reportedly issued about $20 million bonds, with a quarterly coupon of 1,98% while one of Santander Group’s units reportedly purchased the bond at market price. 

According to the global head of Santander Corporate & Investment Banking, José María Linares, the project was initiated as a result of their clients increasingly demanding the best thinking and technology that can improve their capital-raising efforts.

While the bond will continue to exist only on the Ethereum blockchain for maturity, the bank noted that the development represents a significant first step towards a potential secondary market for mainstream security tokens in the future.

The issuance of the $20 million bonds on Ethereum blockchain, is believed to enable the bank to explore a faster, efficient and more straightforward process to issue bonds. Also, the bank through the blockchain could securely tokenize, and register the bonds in a permissioned manner.

Meanwhile, the cash used to complete the quarterly coupons investment, as well as the (on-chain delivery-versus-payment) were also tokenized, according to the press release.

The Santander Securities Services acted as the tokenization agent and custodian of the cryptographic keys, while the Santander Corporate and Investment Banking (CIB), took the role of dealer, for the issuance.

As the one-year maturity bond is hoped to reduce the number of intermediaries required in the process and make the transaction faster, the Santander CIB noted plans to engage with its most innovative client as they move from the project stage to product development.

José García Cantera, a chief financial officer at Banco Santander, said in that regard,

“[…] 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.”

Santander Bank’s involvement with blockchain isn’t the first time that a banking mogul has identified the new invention as viable to solve a problem facing their industry. Coinfomania reported in May that the Bank of Ireland plans to adopt blockchain technology as a tool to store and verify staff credentials.