What is Lombard credit?

Lombard credit is credit secured by a pledge of liquid securities — most often listed shares or a diversified portfolio. It is frequently arranged as a revolving credit line: a limit set against the pledged assets that the borrower can draw, repay, and redraw, paying interest only on the amount drawn. Ownership of the pledged assets is retained throughout, and the facility is released when the credit is repaid. It is the same instrument as a Lombard loan, used as a standby line rather than a single advance.

A credit line, not a one-off loan

The defining feature of Lombard credit is flexibility of drawdown. Where a Lombard loan is typically a single advance taken at the outset and repaid at maturity, a Lombard credit line is a standing limit against your pledged portfolio that you draw against as needs arise — and repay and redraw as liquidity returns.

For a holder who wants capital on standby rather than a lump sum on day one, a revolving Lombard credit line is often the better fit: it keeps borrowing costs to the amount actually used and leaves undrawn headroom available. A home-equity line of credit works on the same revolving principle against property; Lombard loan vs HELOC vs personal loan sets the two side by side.

How the limit is set

The limit on a Lombard credit line is a loan-to-value against the pledged securities. It is set per portfolio, driven by the liquidity and free float of the holdings, their volatility, single-name concentration, and the size of the positions relative to their markets. A diversified, liquid book supports a higher limit than a single concentrated position. The variables are the same ones that drive the advance on a term loan; a fuller treatment sits on how much you can borrow against shares, with a transparent estimate available from the indicative LTV calculator.

What it costs

A Lombard credit line is priced in two parts: interest on the drawn balance (a reference rate such as SARON, SOFR, or EURIBOR plus a spread) and, in some structures, a modest commitment fee on the undrawn headroom that keeps the line available. There is no published rate card; the terms are a function of the portfolio and the structure. The interest rates and costs page sets out the components.

Lombard credit, Lombard loan, Lombard lending

Lombard credit, a Lombard loan and Lombard lending are one discipline described three ways. Lombard credit and a Lombard credit line emphasise the revolving facility. A Lombard loan emphasises a single drawn advance. Lombard lending is the activity itself, also called securities-backed lending. In each case the borrower pledges liquid securities, borrows against a fraction of their value, and keeps ownership.

Is a portfolio line of credit the same as Lombard credit?

In substance, yes: a portfolio line of credit is a US name for a revolving credit line secured by an investment portfolio, the facility this page calls a Lombard credit line. Chase, for example, uses the term on its securities-based lending page for a line of credit secured by eligible securities held in non-retirement accounts.

US banks and brokerages also use the name securities-based line of credit (SBLOC), and several sell the facility under a product name of their own. Seven US firms and their product names are set out in which private banks offer Lombard loans; how an SBLOC usually works is explained on the securities-based lending page. What several of them report about the size of these books is collected in securities-based lending market size.

The labels differ more than the mechanics, though terms vary by lender. A US line is often repayable on demand and limited to non-purpose uses, so the proceeds cannot be used to buy or trade securities. A privately arranged Lombard facility sets its recourse, tenor and custody in its own documents; the Lombard loan term sheet, explained takes those terms clause by clause.

Who uses Lombard credit

Revolving Lombard credits suit private clients and family offices that want standby liquidity for opportunistic investments, bridging, or cash-flow timing; founders and controlling shareholders who prefer a facility to draw on rather than a lump sum; and holders managing a portfolio through a period of activity. The recurring applications are set out under use cases.