Another Bank (Santander) Quits Blockchain Alliance R3

The Spanish banking giant Santander has withdrawn from the bank consortium R3 CEV, becoming the second defector from the blockchain group this week after Goldman Sachs.

Officials at Santander, a founding member of R3, declined to discuss the decision beyond confirming that it was leaving the group.

Santander will refocus its blockchain efforts on other projects, according to a person with close knowledge of the matter who asked not to be named.

The projects are said to include: Utility Settlement Coin, a blockchain project co-launched with Bank of New York Mellon, Deutsche Bank and UBS to create a global, blockchain-based clearing and settlement system, and the Global Payments Steering Group, the standards-setting group formed in September with five other global banks for the use of distributed ledger technology developed by Ripple. Santander’s venture capital arm invested $4 million in Ripple last year.

Goldman was said to have left for other reasons.

It reportedly backed out of its membership when conditions of the investment framework for member banks changed recently. R3 initially sought to raise $200 million from its bank members in a round that would have granted them 90% of the firm’s equity and R3 the remaining 10%, Reuters first reported Monday.

In early fall the deal was renegotiated to a $150 million target, with members to be given a 60% equity stake and R3 to get the remaining 40%. Goldman allegedly sought more leverage in the deal and a seat on the board, Forbes reported Monday. Those details were confirmed by a separate source who was familiar with the deal and asked not to be named. That deal has not been finalized, the source said.

Morgan Stanley and National Australia Bank will not participate in the new deal, according to the Reuters report.

Santander and Goldman are both investors in Digital Asset Holdings, the blockchain technology startup led by ex-Wall Street veteran Blythe Masters. Masters resigned as chairman of Santander Consumer Holdings this year to advise its Spanish parent, Banco Santander, on blockchain technology.