Business 23 August 2017

Dan Taylor

Credit Suisse Plans Blockchain Loans Launch for 2018

Banking giant Credit Suisse is planning to launch its syndicated loans platform on the blockchain in 2018, in a move that would see the technology deployed in a commercial setting.

The news comes off the back of a blockchain trial set up by the bank, in conjunction with a number of other industry partners, towards the end of 2016.

Phase two of the trial concluded in March of this year, exploring the concept of a shared pool of capital on the blockchain, from which individual loans will eventually be granted on commercial terms.

By building the system on an underlying blockchain, Credit Suisse are aiming to reduce the transaction times and costs involved in this syndicated lending model, which it hopes will help attract new investors to the concept when it launches commercially.

Emmanuel Aidoo, of Credit Suisse, said the trials were advancing, and on track for a launch in 2018.

“We are working to put a few dozen smaller loan transactions, where we or other participating banks are the agent, onto a distributed ledger platform using smart contracts in production next year.”
Through relying on smart contracts on the blockchain, Aidoo suggests the new platform could help reduce transaction settlement times, which could help syndicated lending appeal to a wider range of investors in the near future.
“Many investors, including mutual funds and institutional asset managers, might be attracted to loans that are senior to bonds in the capital structure, but they are put off by how long loan trades take to settle.”

The project is the result of a wide-ranging collaboration between Credit Suisse, a range of other banks, and blockchain specialists – including support from the R3 development consortium’s research team.

Goldman Sachs and Blackstone-owned blockchain subsidiaries are also involved in the development effort, alongside input from banks such as Barclays, BBVA, Royal Bank of Scotland, Scotiabank, Societe Generale, State Street Corporation, TenDelta LLC and Wells Fargo.

Syndicating lending is one example of a number of use cases of blockchain technology for the financial services sector currently being pursued.

Analysts have suggested the syndicated lending model could be made significantly more efficient, in terms of settlement times and costs, through a blockchain deployment like the Credit Suisse project.

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