* HSBC aims to replace clunky paper records
* Banks ploughing billions into blockchain, success limited
* 'Digital Vault' platform serves growing private deal
demand
* HSBC sees private placements hitting $7.7 trln by 2022
By Tom Wilson and Lawrence White
LONDON, Nov 27 (Reuters) - HSBC aims to shift $20 billion
worth of assets to a new blockchain-based custody platform by
March, in one of the biggest deployments yet of the widely-hyped
but still unproven technology by a global bank.
The platform, known as Digital Vault, will give investors
real-time access to records of securities bought on private
markets, HSBC told Reuters, and seeks to capitalise on
booming interest in such investments by yield-hungry investors.
Banks and other financial firms have invested billions of
dollars into finding uses for blockchain, a digital ledger that
can be instantly and transparently updated. Few, however, have
come up with practical or widely-used applications.
Proponents say the blockchain will upend the financial
sector by cutting out costly processes or the need for middlemen
- though there have been few solid examples yet of such
revolutionary use.
The HSBC platform will digitise paper-based records of
private placements, using blockchain to reduce the time it takes
investors to make checks or queries on holdings.
Records of so-called private placements are typically held
on paper and lack standardisation, making access tricky and
time-consuming. HSBC currently looks after up to $50 billion
worth of the assets, it said.
It is not yet clear, though, how transformational the
project could become. HSBC could not quantify the amount that
could be saved for the bank or its clients by the platform.
Demand for private placements of both debt and equity have
grown significantly in recent years, as investors search for
higher returns amid low interest rates worldwide and technology
firms in particular shun the scrutiny of public markets.
HSBC expects the global value of private placements to hit
$7.7 trillion by 2022, a jump of 60% from five years earlier.
Over the same period, it thinks allocations by asset manager
clients will grow to 20% from 9%.
Ciaran Roddy, who heads custody at HSBC's securities
services arm, said interest in private placements from U.S. and
British insurers, as well as Asian and Middle Eastern sovereign
wealth funds, is on the rise.
"With some of the yields that are on offer, we are
definitely seeing an increase in demand," he said.
The news comes ahead of an expected shake-up of HSBC's
global banking and markets division, with interim Chief
Executive Noel Quinn seeking to cut costs and improve returns in
the business.
Windsor Holden, an independent consultant who tracks
blockchain and cryptocurrencies, said major savings were
unlikely in the initial stages of projects such as the custody
platform.
"I wouldn't expect to see huge savings, or huge efficiencies
announced in the first year to 18 months," he said.
(Reporting by Tom Wilson and Lawrence White, Editing by
Alexandra Hudson)