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.
- 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 Stock Loan vs Margin Loan.
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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