Bank of Communications, one of four state-owned commercial banks in China, has completed an important issue of residential mortgage-backed securities (RMBS) using a blockchain network.
China Securities Times, the spokesman for Chinese financial regulators, reported Thursday that the banking giant has issued a total of 9.3 billion yuan (or about $ 1.3 billion) of RMBS through its proprietary blockchain network, Jucai Chain.
According to a document dated September 27, which describes the details of the issue, the Bank of Communications was the main issuer with China International Capital Corporation as a lead underwriter and book runner for the offer. Other co-signers have included the Industrial and Commercial Bank of China and the China Merchants Bank.
By moving mortgage credit data across a distributed network, several parts along the issuance process are able to view the most up-to-date information and conduct due diligence and settle transactions in a peer-to-peer fashion, the report says.
A residential mortgage guarantee title typically consists of a pool of mortgage loans owned by financial institutions, which group these loans into tranches according to their risks and returns, and then sell to other investors.
According to a report from Xinhua last month, the Bank of Communications launched the Jucai Chain platform for the first time in June, in particular for asset-backed securities, in an attempt to accelerate the issuance process. After the initial launch, the bank began to move mortgage loan data on the blockchain in July, according to the source.
Other commercial banks in China have recently announced various issues of asset-backed securities through distributed networks.
For example, the Agricultural Bank of China, another state-owned institution, offered a $ 300,000 loan using a blockchain system in the Guizhou province in July.
And, in August, a private commercial bank in Zhejiang also settled blockchain-based transactions for a $ 66-million credit-based security offering of company accounts.
Image of the Communications Bank via Shutterstock