Spanish bank BBVA has completed the first-ever on-chain syndicated loan for $150 million. According to a Financial Times report Wednesday, Nov. 7, the country’s second-largest bank arranged the loan for national electrical grid operator, Red Electrica.

Syndicated loans have been a long-standing proposed use case for financial services applications in blockchain. The technology is an ideal vehicle for a loan involving multiple players. A syndicated loan is where a group of banks pull together to lend to one borrower. The other lenders in this scenario were Japan’s Mitsubishi UFJ Financial Group and France’s BNP Paribas. The transaction was completed on a private Ethereum blockchain network. 

The syndicated agreement has also been recorded on the ETH public blockchain and timestamped and recorded at each step of the process on the Hyperledger network. The loan’s data is immutable and a third party cannot alter any information. The loan signatures and time staps act as document identifiers on the network to help maintain authenticity.

The typical loan syndication process is still pen-and-paper. Banks use fax machines and this greatly delays the loan process and makes the financial service costly. As demonstrated in the BBVA pilot loan blockchain can be an ideal platform for multi-party loans. Abridging this previously lengthy process and making it more secure helps to cut costs and save time.

BBVA’s exploration into blockchain financial services didn’t start and end with this single loan pilot. The bank completed a corporate  $91 million loan pilot this past April on the public Ethereum blockchain and a private digital ledger.