SABB and HSBC complete first blockchain trade transaction in Saudi Arabia and Bahrain

SABB and HSBC have for the first time used blockchain technology in Saudi Arabia and Bahrain to finance international trade. The move puts Saudi Arabia and Bahrain at the forefront of global trade, introducing new levels of efficiency, security and transparency for corporate’s looking to access new markets.

The transaction involved the shipment of homogenized aluminium billets from Aluminium Bahrain B.S.C. (“Alba”) to Saudi Arabia’s Altaiseer Aluminium Corporation (“TALCO”).  A Letter of Credit (“LC”) was issued by TALCO on a blockchain based platform using R3’s Corda system.

Majed Najm, Deputy Managing Director, Corporate and Institutional Banking, The Saudi British Bank, said: “There’s been a lot of excitement about the commercial benefits of blockchain, so I’m proud we’re first to use it to improve how Saudi corporates trade internationally. Blockchain can improve many aspects of international trade, so it’s great to be in a position to pioneer these changes for the good of our customers and the economy.”

Melika Betley – CEO, HSBC Bahrain, said: “As the world’s leading bank for trade finance, HSBC is actively supporting the adoption of technologies such as blockchain to make global trade faster, safer and simpler. With intraregional trade continuing to grow, we see tremendous potential for blockchain in the GCC.  I’m delighted that this transaction has involved Bahrain and plays to its strengths as a rapidly evolving fintech ecosystem.”

This transaction further evidences the commercial and operational viability of blockchain as an alternative to conventional exchanges of paper-based documentation. The blockchain LC flow mirrors the traditional process (agreeing letter of credit terms, application, issuance, advising, amendment request and its approval, document presentation, discrepancy resolution, and bill settlement instructions), with all participants using a single blockchain platform.

R3’s Corda uses blockchain to track, and trace information as it moves between parties. The Corda technology keeps all stakeholders in sync, reducing the need for reconciliation and speeding up transactions, whilst providing visibility on progress for all.  This visibility means greater confidence for all parties involved, including banks, making trade finance more straight forward.

Suliman S. Al Oufi, General Manager, TALCO, said: “We’re delighted to be the first to trial the use of blockchain in this way. We’ve always been innovative in terms of technology related to our product so it is a natural progression to explore innovation that helps us to trade more efficiently with our key overseas partners. We’re delighted banks like SABB are exploring new ways to take the hassle out of international trade for Saudi companies.”

Ali Al-Baqali, Acting CEO – Aluminium Bahrain B.S.C. (Alba), said: “Bahrain is on the go to establish itself as a hub for digital solutions specifically in FinTech arena within the region. At Alba, we don’t see ourselves just as an aluminium supplier but we want to be also recognized for our progression in selling and trading more efficiently through digital platforms with our key partners such as TALCO.”

A blockchain is a system in which an immutable record of transactions is maintained across several computers that are linked in a peer-to-peer network.  Through decentralised, secure networks, blockchain technology can be the conduit that connects trade partners globally to share data in a scalable way that makes the trade process faster, safer and simpler. It is a one-step process that helps to remove pain points in trade by acting as a catalyst - making trade more attractive and accessible than ever before.

-Ends-

Media enquiries to:
Mai A Bindayel
Head of Communications SABB
Phone     +966 11 276 3436
Email       mai.a.bindayel@sabb.com 

Greta Madgwick
Head of Communications Qatar and International Markets
Tel: +97444254224
Email: greta.madgwick@hsbc.com 

HSBC Holdings plc

HSBC Holdings plc, the parent company of the HSBC Group, is headquartered in London. The Group serves customers worldwide from around 3,900 offices in 66 countries and territories in Europe, Asia, North and Latin America, and the Middle East and North Africa. With assets of US$2,558bn at 31 December 2018, HSBC is one of the world’s largest banking and financial services organisations.

SABB Boilerplate

SABB was incorporated in 1978 as Joint Stock Company and associate of HSBC Group, one of the world’s largest banking and financial services organizations.  SABB operates through a wide network of branches and ATMs in the Kingdom. It is a full financial services group providing services in the areas of Personal Banking, Corporate Banking, Investment Banking, Private Banking, Islamic Banking, Treasury Services.  SABB as a ‘Joined Up’ institution created specialized JVs and/or subsidiaries such as, HSBC Saudi Arabia Limited, SABB Takaful and SABB Insurance Agency Limited.  A clear reflection of SABB’s profile in Saudi Arabia is the number of honours and awards received from international rating organisations and publications.   The Bank’s fully paid-up capital is SAR 20.5 billion, following a legal merger with Alawwal Bank, whereby the two banks became one entity representing the third largest bank in terms of assets in Saudi Arabia.

HSBC in the MENAT region

HSBC is the largest and most widely represented international banking organisation in the Middle East, North Africa and Turkey (MENAT), with a presence in 9 countries across the region.  HSBC has operations in the United Arab Emirates, Egypt, Turkey, Qatar, Oman, Bahrain, Kuwait and Algeria. In Saudi Arabia, HSBC is a 29.2% shareholder of Saudi British Bank (SABB), and a 51% shareholder of HSBC Saudi Arabia for investment banking in the Kingdom.

This presence, the widest reach of any international bank in the region, comprises some 350 offices and around 10,500 employees. In the year ending 31st December 2018, HSBC in the MENAT region made a reported profit before tax of US$ 1,557m. 

About LC Blockchain Consortium

This consortium is a blockchain-based open industry platform to create, exchange, approve, and issue Letters of Credit on Corda, R3’s blockchain platform. It is initiated by eight founding member banks, including Bangkok Bank, BNP Paribas, CTBC, HSBC, ING, Natwest, SEB and Standard Chartered, in partnership with Bain, CryptoBLK and R3. Voltron will improve the trade finance process by simplifying letters of credit, delivering shorter settlement times, instant discrepancy resolution and simplified sanctions screening. The consortium is inviting banks, technology partners, and corporates to join the network.

© Press Release 2019