DBS Bank China Issues Tier-2 Capital Bonds with Help from Blockchain Technology

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The Chinese unit of a leading Singaporean bank has used blockchain technology to facilitate the issuance of capital supplementation bonds.

On 22 March DBS Bank (China) successfully issued 2 billion yuan in tier-2 capital bonds with a coupon rate of 4.70%. Proceeds raised from the issue will be used to supplement the issuer’s tier-2 capital.

DBS Bank teamed up with Shanghai Pudong Development Bank (SPD Bank) and China Central Depository and Clearing (CCDC) to use blockchain technology for bookkeeping purposes during the issuance process.

The three parties jointly established a consortium chain, establishing multiple nodes to cater to information disclosure and sales allocation phases.

The use of blockchain technology to facilitate bond issuance is expected to raise efficiency and security levels, as well as reduce information asymmetries and reduce the risk of data tampering.

In December 2020 DBS Bank and SPD Bank executed a “Fintech Memorandum of Cooperation” as part of broader effort to facilitate cooperation between Shanghai and Singapore.

Under the Memorandum the two parties will pursue research and innovation in areas including data management, open banking, blockchain applications and smart risk management.

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