Transaction marks the first time such an instrument has been issued without a traditional paper-based process occurring in parallel. By applying blockchain technology, the tasks involved in the creation and execution of the transaction documentation – an integral stage that usually takes several days to complete in the traditional paper-based process – can now be resolved in a matter of just a few seconds. Platform’s open architecture allows the future integration of additional banks and platforms.
„Erste Group and ASFINAG have conducted the first end-to-end digital issuance of a debt financing instrument in
Europe via a blockchain platform.”, according to the press release. The issuance of the EUR 20 mn Schuldscheindarlehen (“SSD”) by ASFINAG was successfully concluded at the start of the week on Erste Group’s newly-developed platform. The Austrian insurance companies Wiener Städtische Versicherung and DONAU Versicherung and the Austrian regional bank Hypo Vorarlberg were among the investors which subscribed to the novel issuance.
By applying blockchain technology to provide issuers and investors with improved efficiency, more transparency and a lower level of operational risk, the platform promises to make Schuldscheindarlehen and similar capital markets products more accessible and their handling more efficient, both for corporate issuers and for institutional investors.
The issuance of the EUR 20 mn debt financing instrument by ASFINAG, the commercial operator and builder of
motorways and expressways in Austria, was concluded on Monday in the inaugural application of the digital
issuance platform that Erste Group has developed using Hyperledger Fabric, the Linux Foundation’s offering for
enterprise blockchain platforms.
The entire workflow involved in the issuance of the Schuldscheindarlehen was conducted on Erste Group’s permissioned blockchain platform, without the parallel implementation of the traditional process involving paper-based documentation and physical signatures. Instead, ASFINAG as issuer, Erste Group as lead arranger, and investors were able to carry out the entire issuance process (distribution, allocation and execution of the Schuldscheindarlehen agreement) in an end-to-end digital manner.
Erste Group Corporates & Markets board member Jozef Sikela: “This blockchain-based capital markets issuance
provides another example of Erste Group’s success in developing innovative technology-driven solutions that
bring real benefits for our clients. We are now focusing on how we can make these benefits accessible to as many
of our clients – corporates, financial institutions, public sector-issuers, as well as investors – as possible, thus
helping corporates to grow their business and strengthening the region’s capital markets and overall growth
outlook.”
Bernhard Leder, Head of Group Markets Origination and Funding at Erste Group, adds “We’re very
proud to have applied blockchain technology in a way that promises to make Schuldscheindarlehen more
attractive to both issuers and investors. By removing the need for manual steps that are labour-intensive, slow
and potentially error-prone, our real-world implementation of blockchain can make the issuance of such
instruments quicker, simpler and more efficient.”
Klaus Schierhackl (ASFINAG CEO) and Karin Zipperer (ASFINAG CEO): “As one of Europe´s leading
infrastructure providers we naturally build on new technologies in terms of construction, maintenance and tolling.
We seize the opportunities of digitalisation – now also in terms of financing. Most important part for us is the
absolute security of blockchain technology. We satisfied ourselves of this fact. That is why ASFINAG is on board.”
Wiener Städtische sees its first mover role confirmed: „This transaction marks a further step in our digitalization
offensive. The forward-looking blockchain technology provides us with an opportunity to implement our
investments even more quickly and transparently. At the same time, it addresses our paramount interest in
making sure that the highest security standards are met,” says Christine Dornaus, member of the managing board
of Wiener Städtische Versicherung.
„As an insurer, we invest in solid companies and by doing so strengthen Austria as a business location and create
added value for our customers. Error-free and smooth processing is particularly important element of our
approach to investing. Digitalization allows us to make our processes lean and efficient. Blockchain technology is
trend-setting in this respect,” Reinhard Gojer, member of the Managing Board of DONAU Versicherung,
emphasizes.
Michel Haller, CEO of Hypo Vorarlberg: „”The blockchain technology opens a path to the digital economy. It
creates great opportunities for automatization, potential for increasing efficiency of processes and provides
security for transactions. We expect that a huge amount of service business will be handled via blockchain in the
future. How the development will go on has to be part of the process in the following years.”
Seconds, not days – all thanks to blockchain
By applying blockchain technology, the tasks involved in the creation and execution of the transaction
documentation – an integral stage that usually takes several days to complete in the traditional paper-based
process for Schuldscheindarlehen issuances – can now be resolved in a matter of just a few seconds.
While making it possible to massively reduce the administrative burden associated with such transactions, the platform’s implementation of blockchain technology also fully reflects the onboarding procedure and the banking secrecy considerations expected by the participants of Schuldscheindarlehen issuances. In addition, Erste Group has structured the platform so that its open architecture would allow for the future integration of additional banks and platforms.
Schuldscheindarlehen offer distinct benefits for corporates
Schuldscheindarlehen are a well-established debt financing instrument in Europe, with an outstanding volume of
more than EUR 100 bn in the continent’s overall SSD market. While this instrument is most popular in the
German-speaking countries, the SSD market has become increasingly international over the past few years, with
Polish, Hungarian and Czech firms among those making inaugural Schuldscheindarlehen issuances.
Schuldscheindarlehen have elements of both loans and bonds, as they involve a bilateral, unregistered and
(generally) unrated loan agreement that is sold directly to institutional investors; SSDs cannot be listed. Typically
structured as senior unsecured instruments, Schuldscheindarlehen tend to have a minimum volume that is
significantly lower than the comparable minimums generally relevant for syndicated loans or corporate bonds. In
addition, both the documentation and the preparation period for SSDs are generally briefer than those for
alternative instruments.
Blockchain technology shows its strength
Blockchain technology provides a new way of storing inalterable data transactions on distributed computers, with
that data secured by cryptographic processes. Each blockchain starts with a network whose members are
connected to each other and exchange data and assets over the internet in a secure manner. The set-up used by
blockchains is also transparent and verifiable, as all such individual transactions must be confirmed by a majority
of the participants in the network.
Blockchain technology is especially interesting for many industries, including the financial sector, because it
promises to help make transactions of all kinds faster, simpler, more transparent and more cost-efficient in the
future.
The blockchain implementation developed by Erste Group for its Schuldscheindarlehen platform is built on the
basis of the Linux Foundation’s Hyperledger Fabric, which leverages container technology to host smart contracts
called “chaincode” that comprise the application logic of the system.
Erste Group was advised by Wolf Theiss on legal matters related to the novel use of a blockchain-based process
for this issuance, while the consultancy d-fine provided Erste Group with advice on the design and implementation
of the blockchain platform.
ASFINAG is reliable partner on Austria’s motorways and expressways. ASFINAG was founded in 1982 and is a
federal agency. The responsibilities: ASFINAG plans, finances, builds, maintains, operates and collects toll for
2,220 kilometres of motorways and expressways. More traffic safety, best possible transport links between Austria
and its neighboring states and the essential shift of traffic to highways and expressways – these are the aims of
ASFINAG with its 2,700 employees.
Banking 4.0 – „how was the experience for you”
„So many people are coming here to Bucharest, people that I see and interact on linkedin and now I get the change to meet them in person. It was like being to the Football World Cup but this was the World Cup on linkedin in payments and open banking.”
Many more interesting quotes in the video below:
