The Lombard loan, structured for listed equity.
A Lombard loan is credit advanced against a pledge of liquid assets — most often listed shares. The shareholder keeps the position and its upside; the capital is released against it. In the United Kingdom, Europe, and the Asian private-banking centres, this is the term of art for what is elsewhere called securities-backed lending or a stock loan.
What is a Lombard loan?
A Lombard loan — also called Lombard lending or Lombard credit — is a loan secured against a pledge of marketable securities. Against listed equity it is the same instrument this firm arranges as securities-backed lending: the shareholder pledges listed shares, draws a cash loan against a fraction of their market value (the loan-to-value), retains beneficial ownership and dividend rights subject to structuring, and recovers the full position on repayment. The name descends from the Lombard merchant-bankers of medieval Europe; the instrument remains the backbone of private-banking credit today.
The distinction worth holding is vocabulary, not structure. “Lombard loan” is the dominant term in the United Kingdom, Switzerland, Germany, and across the European and Asian private-banking markets; “securities-backed lending” and “stock loan” describe the same financing elsewhere. What matters is the structuring discipline beneath the name.
The variables that matter.
- iLoan-to-value (LTV). Cash is advanced against a defined percentage of the pledged shares’ market value, calibrated to the position’s liquidity, the underlying’s volatility, and the recourse profile. There is no published rate sheet; LTV is set per position after review. See how much you can borrow and how pricing works.
- iiRecourse. Structured as non-recourse, limited-recourse, or full-recourse. A non-recourse Lombard loan bounds the borrower’s downside below a defined floor — the principal reason a concentrated holder chooses the bespoke structure over a brokerage facility.
- iiiTenor. Typically 12 to 36 months for institutional transactions, with terms locked at inception and extension options sometimes negotiated.
- ivCustody. Pledged shares are held with a qualified custodian under bankruptcy-remote arrangements, insulated from the lender’s credit. Beneficial ownership stays with the shareholder throughout.
- vCross-currency. The loan can be advanced in a currency different from the collateral — a GBP- or HKD-listed position financed in USD or EUR, for example — with the hedging and tax considerations addressed in the documentation.
Where a Lombard loan can be arranged.
A Lombard loan can be structured against shares listed on any of the principal global cash equity exchanges — across the Americas, the United Kingdom and Europe, the Middle East and Africa, and the Asia-Pacific region. Eligibility for a specific position turns on free float, average daily trading volume, volatility, concentration, and the holder’s regulatory profile.
Not the same as a margin loan.
A Lombard loan is often compared to a brokerage margin loan, because both are secured by listed shares. They are structurally different. A margin loan is a standardised, open-ended brokerage facility, full-recourse, with collateral held at the broker and automatic margin calls. A Lombard loan in its institutional form is bespoke: negotiated LTV and tenor, an optional non-recourse profile, and bankruptcy-remote custody outside the lender’s balance sheet. For a substantial or concentrated holder, those structural differences — not the headline rate — are the reason to choose it. See Lombard loan vs margin loan vs stock loan for the terminology, and Stock Loan vs Margin Loan for the full structural contrast.
On Lombard lending.
Q · 01 What is a Lombard loan?
Q · 02 What is the difference between a Lombard loan and Lombard lending?
Q · 03 How is a Lombard loan different from a margin loan?
Q · 04 What loan-to-value and rate can I expect on a Lombard loan?
Q · 05 Which shares can be used as collateral for a Lombard loan?
A specific position to finance?
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