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Porsche Arranges $170m Loan Using BBVA’s Blockchain Platform

Last Updated March 4, 2021 3:15 PM
Melanie Kramer
Last Updated March 4, 2021 3:15 PM

Prestige car-maker Porsche has arranged a loan to back its proposed strategic acquisitions using Spanish-bank BBVA’s ever-developing distributed ledger technology (DLT) platform.

The loan, valued at €150 million (the equivalent of nearly $170 million USD) is, says a press release  from BBVA:

“The first acquisition term loan ever arranged through blockchain technology.”

Acquisition term loans are provided for a specific purpose and period. In this case, Porsche Holding Salzburg, a subsidiary of Volkswagen AG, is seeking to expand its retail distribution network in Europe and Asia.

The pilot also makes Porsche, still the largest automotive distributor in Europe, the first non-Spanish borrower to use BBVA DLT to negotiate and close a corporate loan.

Frank Hoefnagels, Head of Banco Bilbao Vizcaya Argentaria (BBVA) Corporate Investment Banking (CIB) in Germany, is “proud” to be on a common blockchain path with such a longstanding partner. He adds:

“This transaction is all about putting blockchain technology into meaningful practice in the interactions with our clients.”

Hoefnagels illustrates a key next step for blockchain technology, after numerous pilots in the sector, the expectation now is to see more real blockchain use cases and applications. For BBVA, which has been actively working on its technology for some time, this is obviously important.

Using Blockchain to Create a DIY Financing Model

BBVA hopes to use blockchain to automate negotiation processes and minimize operational risks as well as improving the client experience. The bank plans to progress towards a “Do It Yourself” (DIY) financing model for its business and corporate clients. The bank says:

“Blockchain technology also ensures traceability and immutability making the documentation process safer and more transparent.”

BBVA believes its latest blockchain transaction demonstrates how new technologies can “provide a leap in efficiency in financial markets,” something again that forms the basis of blockchain’s promise.

Dominik Paschinger, Branch Manager of Porsche Corporate Finance, Belgium, says “digitalization” is a key part of “Porsche Holding’s Strategy 2025” and that:

“The goal is to advance in all fields of activity. We think that blockchain technology has great potential.”

BBVA has also recently used its blockchain platform to finalize a syndicated loan for Red Eléctrica of the same value and extend a line of credit with Repsol worth €325 million, around $367 million USD. It has previously trialed distributed-ledger loan processes using both Ethereum and Ripple blockchains successfully, naming itself the first global bank to successfully complete blockchain-based corporate lending.

Featured image from Shutterstock.