The Lombard loan.

A Lombard loan is a loan secured by a pledge of liquid assets — most commonly listed shares or a diversified securities portfolio. The borrower pledges the portfolio as collateral, draws a cash advance against a fraction of its market value (the loan-to-value, or LTV), retains beneficial ownership and the right to dividends subject to structuring, and recovers the portfolio in full on repayment. "Lombard loan" is the private-banking name for the instrument known elsewhere as securities-backed lending or a share-backed loan.

How a Lombard loan works

The mechanics are consistent across markets. The borrower pledges a defined pool of securities to a custodian under a security agreement. Against that pledge, the lender advances cash equal to a percentage of the pool's market value — the loan-to-value. The borrower pays interest on the drawn amount for the term of the facility. Throughout, the pledged assets remain the borrower's property; the pledge simply gives the lender security over them. When the loan is repaid, the pledge is released and the borrower's control over the assets is unencumbered once more.

Because the assets are not sold, three things follow: the borrower keeps the economic exposure to the underlying, the borrower keeps the dividend and voting rights (subject to how the facility is structured), and the disposal that a sale would represent — with its tax consequences — does not occur while the position is held.

Loan-to-value: how much you can borrow

The single most important number in a Lombard loan is the loan-to-value. LTV is set per portfolio, not per asset class. A diversified, liquid book of large-capitalisation shares supports a higher advance than a single concentrated small-cap holding, because the lender can value and, if necessary, realise the collateral with far greater confidence. The variables that drive LTV are consistent:

• Liquidity and free float — how readily the collateral can be valued and sold without moving the price.
• Volatility — how far the collateral's value can move over the life of the facility.
• Position size relative to the market — a holding that is large against a stock's daily volume is harder to exit than one that is small.
• Single-name concentration — a diversified portfolio spreads risk that a single position concentrates.
• Recourse profile — whether the lender's remedy is limited to the collateral or extends to the borrower.

Indicative ranges are issued only after a review of the specific holdings. For an illustrative, transparent estimate of where a position might sit, the firm publishes an indicative LTV calculator. A fuller treatment sits on how much you can borrow against shares.

Recourse profiles

Institutional Lombard loans are arranged across three recourse profiles, and the choice materially changes the terms:

• Non-recourse — the lender's only remedy on default is the pledged collateral; the borrower's other assets are ring-fenced. This is the most protective profile for the borrower and typically carries a lower LTV and a wider spread.
• Limited-recourse — recourse beyond the collateral is capped or conditional, balancing protection and pricing.
• Full-recourse — the borrower stands behind the loan in full, which supports a higher LTV and a tighter spread.

Tenor, costs, and custody

Lombard facilities are typically arranged for a term of twelve to thirty-six months, often with the option to renew. Pricing is expressed as a reference rate in the loan currency — such as SOFR, SONIA, or EURIBOR — plus a spread that reflects the loan-to-value, recourse, tenor, and the liquidity and volatility of the collateral. There is no published rate card; the right basis for comparison is the whole structure, not the headline coupon. A dedicated treatment sits on Lombard loan interest rates and costs. Throughout the facility, the pledged assets are held by a qualified custodian under bankruptcy-remote arrangements, so that the security is clean and the borrower's ownership is preserved.

Lombard loan at a glance

How it compares to other routes

A Lombard loan is one of several ways to raise liquidity from a portfolio, and it is not always the right one. A sale realises capital but ends the position and triggers a disposal. A margin loan lends against securities too, but as a standardised, open-ended, full-recourse brokerage facility. A collar or hedge manages downside without releasing much cash. The liquidity options compared page sets the four routes side by side; the short version is that a Lombard loan fits a holder who wants cash and wants to keep the position.

Who arranges the facility

Lombard Financing is a Geneva Lombard-credit house. We act as an introducer and arranger of private, portfolio-backed financing — engaged by introduction or direct enquiry, with senior principals involved throughout and no retail business. The process runs in five disciplined stages from a confidential enquiry to funded capital, and indicative terms typically follow within one or two business days.