Lombard loans in Germany.
Private, securities-backed credit against Germany-listed shares — pledged, not sold, with ownership retained.
A Lombard loan against Germany-listed shares is credit secured by a pledge of equity listed on the Deutsche Börse. The holder pledges the shares as collateral, draws cash against a fraction of their market value, keeps beneficial ownership and dividends subject to structuring, and recovers the position in full on repayment. It is a loan against shares rather than a sale of them — the Geneva private-banking form of what is elsewhere called a share-backed loan. Known locally in some markets as “Lombardkredit”, the instrument is the same: a loan secured by a pledge of listed shares.
- Lombard loans are arranged against shares listed on the Deutsche Börse (FWB).
- The pledge is not a sale: ownership, dividends, and the upside stay with the holder.
- Loan-to-value is calibrated to the specific position, funded in EUR or cross-currency.
- Structured under the BaFin regime, with disclosure from 3%.
Eligible collateral and venues
Lombard Financing arranges facilities against equity listed on the principal Germany venue: Deutsche Börse / Frankfurter Wertpapierbörse (FWB). Eligibility at the position level turns on the liquidity and free float of the specific line, its volatility, and the size of the holding relative to its typical traded volume — the same variables that drive the loan-to-value.
Regulator and disclosure
Shares listed in Germany are regulated by Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin). Substantial-shareholding disclosure is triggered from 3%, and a pledge over a large line is structured with that reporting regime in view so that the transaction remains discreet and compliant. Where a holding sits near a control or takeover threshold, the structure is arranged to avoid disturbing the position.
Funding, custody, and structuring
Facilities are typically arranged for a tenor of twelve to thirty-six months, funded in EUR or in another currency on a cross-currency basis. Throughout the facility the pledged shares are held by a qualified custodian under bankruptcy-remote arrangements, so the security is clean and the holder’s ownership is preserved. Non-recourse, limited-recourse, and full-recourse structures are available, and the choice interacts with the loan-to-value and the pricing. One distinction is worth drawing at the outset: this is not a stock loan in the securities-lending sense, where title passes to a borrower who may on-lend or short the line. Here the shares are pledged and remain the holder’s throughout, as the comparison of Lombard, margin, and stock-loan structures sets out.
| Listing venue(s) | Deutsche Börse / Frankfurter Wertpapierbörse (FWB) |
|---|---|
| Regulator | Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) |
| Currency | EUR (cross-currency available) |
| Disclosure threshold | From 3% substantial-holding disclosure |
| Principal indices | DAX, MDAX, SDAX, TecDAX |
| Indicative tenor | 12–36 months, renewable by agreement |
| Recourse | Non-recourse / limited-recourse / full-recourse |
Detail by listing venue
Each venue has a page of its own, setting out how securities-backed credit is arranged against shares admitted there — the disclosure regime, the settlement and custody chain, the eligible segments, and the currency in which a loan against shares is normally drawn.
- Lombard loans against Deutsche Börse-listed shares — Deutsche Börse / Frankfurter Wertpapierbörse, Frankfurt. BaFin-regulated, with disclosure from 3%; indices DAX, MDAX, SDAX, TecDAX.
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On this market, specifically.
The market and its listed universe
Frankfurt is the venue: the Frankfurter Wertpapierbörse and its Xetra order book carry the bulk of German turnover, with regional exchanges in Stuttgart, Munich and Düsseldorf alongside. The DAX was widened from thirty constituents to forty in 2021, with MDAX, SDAX and TecDAX beneath it; the regulated market splits into Prime Standard and General Standard, while Scale sits on the open market. What distinguishes the German universe is family control at scale — engineering, chemical, automotive and consumer groups where a founding family, a holding company or a foundation holds a decisive block — so headline market capitalisation and genuinely tradeable float diverge sharply. Shares circulate in both bearer and registered form, which matters when security is taken.
Who borrows against listed shares here
The German Mittelstand did not stop being family-owned when it listed. Behind a large share of the DAX and MDAX sit founding families, family holding companies, pooling agreements and charitable foundations that hold controlling or blocking stakes and have no intention of reducing them. That is the point: German inheritance and gift tax offers substantial relief for business assets on the footing that the business stays in the family, so raising cash by selling can cost far more than it first appears. Borrowing against shares therefore does specific work here — funding a payout to a sibling branch, financing a generational transfer, or meeting a tax bill — while the block, and the pool it belongs to, stays intact.
Disclosure and regulation
Germany runs one of Europe's most granular ownership regimes. Under the WpHG a voting-rights holder notifies BaFin at 3%, then at 5, 10, 15, 20, 25, 30, 50 and 75%, so positions here leave a detailed footprint. A Lombard loan does not by itself cross any of these lines — the shares stay the client's, with dividends and votes retained — but the fine step structure means we watch carefully where a large holding rests against the lower marks. Documentation for a client close to a threshold, or exposed to takeover mechanics, is drawn so that even enforcement would not force an unplanned disclosure.
The legal form of the security
German security over listed shares is normally a Verpfändung, a pledge under the Civil Code, perfected by notice to the custodian bank so that it holds the co-ownership interest for the pledgee; German banks also rely on the pledge built into their standard business terms over securities in custody with them. The alternative is Sicherungsübereignung, an outright transfer for security purposes governed by a separate security-purpose agreement, which is a different animal with different consequences. Enforcement of a classic pledge involves formal notice and prescribed waiting periods, with sale at the market price through a broker where the securities are exchange-traded, while the financial collateral rules can offer a faster route. Which applies to a given facility is a question for German counsel.
Custody and how security is taken
German shares are usually immobilised rather than dematerialised: a single global certificate is deposited with Clearstream Banking Frankfurt, the German central securities depository, and investors hold a fractional co-ownership interest in that certificate through the collective safe custody system the Depotgesetz sets out. Settlement runs on TARGET2-Securities. For share-backed financing this makes the custodian central, because possession — which German pledge law still cares about — is delivered through the custody chain rather than by handing over paper. Where the issuer has registered shares, the company’s own share register adds a second layer, and whether an entry there needs to change is a point to check issuer by issuer before drawdown.
Currency and cross-border considerations
The euro is the currency, capital moves freely under the EU treaties, and there is no approval regime for a foreign lender taking security over German listed shares or for a non-resident pledging them. Repatriation of proceeds is unrestricted. The German particularity is statistical rather than restrictive: cross-border payments above a modest threshold must be reported to the Bundesbank under the foreign trade regulations, a filing duty that catches loan drawdowns and repayments and is easily overlooked on a first cross-border facility. Separately, holdings in defence, critical infrastructure and certain technology issuers can fall within Germany’s foreign investment review, which bears on what an enforcement transfer would require rather than on the borrowing itself.
Tax questions to put to your adviser
Germany levies no securities transfer tax, which removes a friction that exists in Paris, Milan and Madrid, but several questions still belong with a German tax adviser. Does the chosen security form matter — a pledge leaves ownership untouched, while a transfer for security purposes may be viewed differently — and could either be recharacterised as a disposal? How is withholding tax on dividends handled while the securities are pledged, and do the rules requiring a minimum holding period and genuine economic risk for a withholding credit interact with anything the lender does by way of hedging? Is interest deductible in the borrower’s position, and does German withholding attach to interest paid to a foreign lender?
General information only — not tax advice. Treatment turns on your own circumstances and residence, and on law that changes.
An illustrative example
To illustrate, an entrepreneur holding a DAX constituent might take a Lombard loan against it rather than sell. The holding stays in the client's name, dividends and voting rights are preserved, and there is no sale. The advance can be drawn in euro or in another currency where the client's outgoings sit. What loan-to-value such a position supports is not a published figure and is settled only after we have reviewed the holdings themselves, because it turns on the line: genuinely tradeable float as against headline market capitalisation — the German divergence that matters most here — together with average daily volume, price volatility, the weight of the block relative to the issuer and to the family's wealth, and whether a pool agreement or a nearby disclosure step would constrain a realisation. A spread of liquid large caps and a single concentrated Scale-segment line are simply not the same collateral. The example is illustrative only, offered to show the shape of a facility rather than to indicate any rate, advance or commercial term.
Illustrative only — not an offer, a quotation, or a commitment to lend.