German carmaker, Porsche, closed a $170 million loan using a blockchain platform last week with Spanish bank Banco Bilbao Vizcaya Argentaria (BBVA) to support strategic acquisitions in the retail distribution network in Europe and Asia.
It follows a similar move by BMW in which the other German carmaker team up with a blockchain company, through its financial services arm, to streamline its corporate lending services.
Porsche Blockchain Loan
Porsche blockchain loan was negotiated and closed by BBVA using distributed ledger technology (DLT). By closing the blockchain loan deal, Porsche has become the first non-Spanish borrower to secure a long-term, strategic loan deal from BBVA.
For this pilot project, BBVA used its blockchain-based platform to arrange, negotiate and successfully disburse the acquisition term loan.
Branch Manager of Porsche Corporate Finance, Dominik Paschinger, commented:
“With digitalization being an integral part of Porsche Holding’s Strategy 2025, the goal is to advance in all fields of activity. We think that the blockchain technology has great potential and are therefore very excited to being able to explore the technological capabilities together with BBVA.”
Using Blockchain to Improve Corporate Loans
Blockchain facilitates corporate loans by enabling digitization of financial processes, and consequently reducing the time it takes to negotiate and close these loans. The technology allows multiple parties to have simultaneous access to a constantly updated digital ledger that cannot be altered. In addition, blockchain technology brings enhanced transparency and traceability of both the negotiation process and the agreed terms of the loan. This helps to keep both the bank and the borrower up to date on the loan fulfillment progress.
BBVA said that distributed ledgers are critical to the success of acquisition transactions because DLT provides greater execution speeds. Furthermore, implementing blockchain will allow the bank to automate processes associated with loan negotiation and reduce operation risks by making the documentation process safer and transparent. This leads to increased efficiency and reduced costs benefiting both banks and clients.
BBVA has already used its platform to disperse other types of loan deals with several Spanish organizations, including electrical grid operator Red Eléctrica de España (REE) and engineering giant ACS Group. The bank has been a fervent adopter of new technology, and has invested in a number of blockchain-based solutions.