Union Bank, a publicly-listed universal bank with over 5 million customers, 200 branches, and 7,000 cash-in and cash-out points, has just issued the country’s first-ever offering of Digital Peso Bonds. The move is in line with its vision to transform traditional banking services through digital innovations.
Digital peso bonds serve as a “proof-of-concept” for the issuance of a retail bond on a digital platform. It leverages blockchain technology for bond tokenization.
Union Bank has partnered with Standard Chartered Plc. in 2020 to ensure the successful completion of its first foray into digital bonds.
In a statement, UnionBank said that orders received were tokenized, with the tokens issued mirroring the traditional transactions to stay within existing retail bond guidelines. These, however, were not allocated directly to investors.
The success of this issuance opens the door to a future filled with more digitally-based asset offerings.
Blockchain technology shaping the future of capital markets
“This pioneering issuance serves as a building block in UnionBank’s journey to embrace digitization and positive disruption in the industry,” says Jose Emmanuel Hilado, Treasurer, and Head of Global Markets for UBP. “A first in the Philippines, this issuance further unlocks the potential of blockchain technology to be a game-changer and a great disruptor in finance. I am confident that this will be recognized globally as a game-changing digital initiative in the field of finance,” he adds.
For her part, Lynette V. Ortiz, Standard Chartered Plc.’s CEO for its Philippine office, said, “Access to capital markets is an important enabler of progress and economic growth, and this successful issuance opens a host of possibilities in the digital bond space. It’s another step towards financial inclusion.”
Aaron Gwak, Standard Chartered’s managing director and head of capital markets for Asean, added, “We have seen the dynamic development of digital bonds in the ASEAN region, with UnionBank’s maiden offering of digital bonds in the Philippines being the latest addition. While this issuance utilizes DLT as the backend infrastructure for the registry and depository operations, it also serves as a stepping stone for the Philippine banking industry to enhance its infrastructure and gain better investor experience through full democratization of bonds.”
With an aggregate issue size of ₱11 billion, and backed by Distributed Ledger/Blockchain technology, the robust participation from retail and institutional investors has resulted in an order book eleven times its initial minimum offer size of ₱1 billion.
The digital bonds were issued through the digital registry and digital depository of the Philippine Depository & Trust Corp. (PDTC) utilizing infrastructure powered by STACS blockchain. A new digital infrastructure was then made interoperable with the traditional trading-to-clearing infrastructure of the Philippine Dealing & Exchange Corp. (PDEx) Fixed Income Market.
Widely known to have been trailblazing many firsts in the country since it began operations 40 years ago, UnionBank has always been among the first to embrace technological innovations to empower its customers to the future of banking.
The bank’s 40-year journey began with a simple vision: to become one of the top three universal banks in the country with respect to market capitalization, profits, and customer coverage. It was recognized by The Asset as “Digital Bank of the Year”, holding the distinction of being the first and only Philippine bank to receive the award five years in a row.
As a result, Union Bank has successfully established itself as a digital dynasty in the banking industry with its commitment to ‘Tech Up, Pilipinas’ and enable inclusive prosperity. UnionBank stays true to its promise that no one gets left behind — not its customers, not its colleagues, or its countrymen.