Sberbank, NSD and MTS complete full-cycle bond deal on blockchain

Sberbank, NSD and MTS complete full-cycle bond deal on blockchain
Sberbank, NSD and MTS complete a full bond deal on blockchain / bne IntelliNews
By bne IntelliNews December 4, 2018

Russia’s leading banking institution, Sberbank, and MTS, a major mobile operator, completed successfully a full-cycle security deal using smart contracts – from bond issue to full execution of the issuer’s obligations to the investor, East-West Digital News (EWDN) reports.

The MTS commercial bonds were organized and purchased by Sberbank’s corporate and investment banking business. Their nominal cost – 750mn rubles, or nearly €10mn – was redeemed.

The transaction was carried out using the blockchain platform of Russia’s central securities depository (National Settlement Depository, or NSD). This platform is based on the Hyperledger Fabric 1.1, one of the latest blockchain implementation frameworks.

As reported by Sberbank, “the use of the blockchain allowed securities and money to be transferred simultaneously.” While the issuer, the NSD and the investor had access to the decentralised platform to carry out the deal, “the list of participants could be changed dynamically,” making the transactions accessible “to a wide range of investors.”

“Changing the world” with blockchain

“Blockchain can change the world just as much as the Internet. This technology is very important to the banking sector as it allows expenses to be reduced, significantly increases the speed and security of transactions and provides an unprecedented level of trust and transparency for all transactions,” commented Andrey Shemetov, Sberbank’s Vice President and Head of the Global Markets Department.

“I’m sure that our joint blockchain project with the NSD and MTS is just the beginning, and products and services using blockchain, including smart contracts, will become commonplace in the future,” he added.

One year ago MegaFon, another major Russian mobile operator, completed a bond issue of 500mn ruble (around $8.6mn at that time) with blockchain settlement. The entire issue was purchased by Raiffeisenbank. The NSD was also involved in the operation.

A few weeks after this experiment, Sberbank completed “the first-ever pilot blockchain payment transaction in the Russian banking industry.” The transaction used the IBM Blockchain Platform on the basis of HyperLedger Fabric. Sberbank’s partners and participants in the pilot were mobile operator MegaFon and its R&D unit MegaLabs, Alfa-Bank, and IBM.