Santander Settles $20 MM End-to-End Blockchain Bond

September 12, 2019

Blog

Banco Santander, Spain’s largest bank, has launched the world’s first bond that’s been issued directly on the Ethereum blockchain and will strictly operate on the blockchain until maturity.

This blockchain bond issued by a major European bank opens the floodgates to disruptive financial technology that allows for the issuance of bonds most quickly and efficiently.

Bond tokenization, which involves securing and registering the bond on distributed ledger technology (DLT), is a major milestone for the capital markets industry and is a key step forward for mainstream secondary market trading of security tokens. The US dollars used to invest in the bond along with the future quarterly interest payments are fully tokenized (digitally represented on the blockchain). This automation has eliminated several intermediaries required to execute this investment, making the transaction much more efficient and simpler to track.

Santander itself is the actual issuer of the $20 million bond and offers a quarterly coupon rate of 1.98%. The Corporate and Investment Banking (CIB) division of Banco Santander acted as the dealer in this offering, while Santander Securities Services acted as the custodian of the private keys.

“Santander is at the forefront of the profound digital transformation of the financial sector and this transaction is one example. 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,” said Banco Santander’s Chief Financial Officer, Jose Garcia Cantera. Santander’s global head of Corporate & Investment Banking (CIB), Jose Maria Linares, said in the press release: “This blockchain-issued bond puts Santander at the forefront of capital markets innovation and demonstrates to clients that we are the best partner to support them on their digital journey.”

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“Santander is at the forefront of the profound digital transformation of the financial sector and this transaction is one example. 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.”

Jose Garcia Cantera

Banco Santander’s Chief Financial Officer

"This blockchain-issued bond puts Santander at the forefront of capital markets innovation and demonstrates to clients that we are the best partner to support them on their digital journey.”

Jose Maria Linares

Santander’s global head of Corporate & Investment Banking (CIB)