A group of banks led by Credit Suisse is eyeing the launch of a commercial platform for blockchain-based syndicated loans, according to reports.
Speaking to finance magazine EuroMoney, Emmanuel Aidoo, who leads Credit Suisse’s blockchain efforts, said that syndicated loan trial – which began last fall – is moving ahead.
Aidoo told the publication:
“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.”
The group involved finished the second phase of their testing in March. Conceptually, the test envisions a syndicated loan market – in which multiple lenders pool their capital for individual borrowers – built on blockchain. The group hopes the technology can reduce barriers between counterparts, reducing both time and cost in making the necessary capital available.
Using smart contracts to reduce those turnaround times could increase the market’s appeal to potential lenders and investors, according to Aidoo.
“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,” he said.
Credit Suisse image via Sonia Alves-Polidori/Shutterstock