BBVA, EIB Group sign first blockchain-based synthetic securitization in European Union

Spanish banking giant BBVA has announced that it has signed a synthetic securitization of €1 billion with the European Investment Bank Group, formed by the European Investment Bank (EIB) and European Investment Fund (EIF).

The agreement marks the first blockchain-based synthetic securitization in the European Union and the third synthetic corporate loan securitisation signed by the EIB Group and BBVA. It aims to foster support for small and medium-sized firms in Spain, providing them with loans on favorable terms.

According to the official release, the EIB Group has granted BBVA a €60 million synthetic guarantee that will be used to provide up to €360 million to finance new investment projects of small Spanish SMEs and midcaps.

The agreement was supported by the European Fund for Strategic Investments (EFSI). Also called the Juncker Plan, the EFSI is an initiative of EIB Group and the European Commission aimed at boosting the economy through mobilising private financing for strategic investments.

The three parties used the DLT platform developed by BBVA to negotiate the agreement – from the origination to the agreement signing. All the negotiation was recorded on the private blockchain Hyperledger, while the hash (unique identifier) of the signed agreement was recorded on the public blockchain Ethereum (testnet).

BBVA and EIB group said that blockchain technology made the documentation process safer and more transparent.

“ BBVA is committed to boosting the growth, competitiveness and digitization of the Spanish SMEs. In addition, we are proud of the DLT platform developed in-house by BBVA, which was used to negotiate this agreement,” Carlos Torres, CEO of BBVA, said.

Earlier this month, BBVA closed a €150 million term loan for Volkswagen subsidiary Porsche using blockchain technology.