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Sberbank and Severstal announce cooperation in carrying out international letter of credit transactions using blockchain technology

01.06.2017

Sberbank and vertically integrated steel and steel-related mining company Severstal PJSC are developing cooperation in technological innovations. In particular, at the 21st Saint Petersburg International Economic Forum they announced a prototype that allows international letter of credit transactions to be performed using blockchain technology.

Using the prototype developed by Sberbank, the parties tested out issuing an international letter of credit (LoC) for a contract to deliver steel signed with one of Severstal’s Belarusian counterparties. Sberbank acted as the confirming bank. Sberbank’s subsidiary bank BPS-Sberbank was the issuing bank.

The project is unique because it involves carrying out a full-cycle international LoC transaction using blockchain – from the moment the LoC application is submitted to the provision of the set of documents for the LoC and tracking the document checking stage. All four participants completed actions using the system, and also monitored each other’s actions. Blockchain technology allows the time required to carry out such transactions to be considerably reduced and simultaneously increases transparency. This is the first solution of its kind developed in Eastern Europe.

Senior Vice President of Sberbank and Head of Sberbank CIB1 Igor Bulantsev commented: “Sberbank was one of the first organisations to begin working on practical application of blockchain because we view it as a very promising technology, including for use in international letter of credit transactions. I am certain that the experience we gained when developing the prototype will help us take customer service to the next level and will be used in the construction of the Bank’s ecosystem.”

Deputy CEO of Severstal Management (the management company of Severstal) Alexey Kulichenko commented: “Severstal continuously studies new opportunities to develop business efficiency which arise as information technology develops. In the financial sector Blockchain technology simplifies document flow, makes processes more transparent, and helps cut costs and shorten deadlines – in this case for letter of credit transactions.”

Information for editors

Sberbank

Sberbank is Russia’s largest bank and a leading global financial institution. Sberbank holds almost one third of aggregate Russian banking sector assets, it is the key lender to the national economy and the biggest deposit taker in Russia. The Central Bank of the Russian Federation is the founder and principal shareholder of Sberbank owning 50% of the Bank's authorized capital plus one voting share, with the remaining 50% held by domestic and international investors. Sberbank has more than 145 million customers in 22 countries. Sberbank has the largest distribution network in Russia with almost 15,000 branches, and its international operations include UK, US, CIS, Central and Eastern Europe, India, China, Turkey and other countries.

The Bank holds the general banking license No.1481 issued by the Bank of Russia. Official websites of the Bank: www.sberbank.com (Sberbank Group website), www.sberbank.ru.

Severstal

Severstal is one of the world’s largest vertically integrated steel and steel-related mining companies. It holds assets in Russia, Ukraine, Latvia, Poland, and Italy. The company’s stocks are listed on Russia’s MICEX-RTS exchange; its GDRs are traded on the LSE. In 2016 the company recorded revenues of $5.916 bln, EBITDA was $1.911 bln. The company produced 11.6 million tonnes of steel in 2016.
http://www.severstal.com/rus/

Sberbank CIB

Sberbank CIB2 is the corporate and investment banking business of Sberbank. Its key areas of activity are corporate finance (including trade finance), the documentary business3, investment banking services, trade operations with securities, and private equity. Sberbank’s corporate and investment banking business provides integrated financial solutions and investment advisory services to its clients, which include major corporations, financial institutions, sovereign states and federal and sub-federal government bodies and organisations.

Additional Information:

Sberbank Press Service
Tel: +7 (495) 957-57-21
E-mail: pressa@sberbank-cib.ru

 

1 On the basis of JSC “Sberbank CIB”
2 On the basis of JSC “Sberbank CIB” and Sberbank
3 Banking products and services provided by Sberbank