Lombard loans in Switzerland.
Private, securities-backed credit against Switzerland-listed shares — pledged, not sold, with ownership retained.
A Lombard loan against Switzerland-listed shares is credit secured by a pledge of equity listed on the SIX. 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 SIX (SIX).
- 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 CHF or cross-currency.
- Structured under the FINMA regime, with disclosure from 3%.
Eligible collateral and venues
Lombard Financing arranges facilities against equity listed on the principal Switzerland venue: SIX Swiss Exchange (SIX). 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 Switzerland are regulated by Eidgenössische Finanzmarktaufsicht (FINMA). 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 CHF 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) | SIX Swiss Exchange (SIX) |
|---|---|
| Regulator | Eidgenössische Finanzmarktaufsicht (FINMA) |
| Currency | CHF (cross-currency available) |
| Disclosure threshold | From 3% substantial-holding disclosure |
| Principal indices | SMI, SLI, SPI |
| 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 SIX-listed shares — SIX Swiss Exchange, Zurich. FINMA-regulated, with disclosure from 3%; indices SMI, SLI, SPI.
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On this market, specifically.
The market and its listed universe
SIX Swiss Exchange in Zurich is the venue, with BX Swiss a smaller domestic alternative. The SMI gathers the blue chips, the SMIM the mid-caps beneath, the SPI covers the investable domestic universe, and the SLI blends the two large-cap tiers under capped weights. The listed population is small but unusually valuable, dominated by pharmaceuticals, food, insurance and private banking, with the largest constituents carrying much of the index. Free float is high in the leaders, yet family and pooled blocks are common further down — watchmaking, elevators, confectionery and luxury all show it — and dual-class structures, including registered shares sitting alongside widely traded non-voting equity securities, are a defining local feature for anyone borrowing against shares here.
Who borrows against listed shares here
Two very different holders finance positions here. The first is Swiss: founding families and their pooling vehicles behind the watchmaking, engineering, confectionery and luxury names, plus foundation and heir structures where the articles or a shareholders’ agreement make selling awkward and control is the whole reason for holding. The second is international: Switzerland books more cross-border private wealth than anywhere else, so a great many pledged securities in Geneva and Zurich are foreign listed lines belonging to families domiciled elsewhere. Both arrive at a loan against listed shares for the same reason — a disposal would surrender a position that is generational, disclosed, or embedded in a pact — while the cash requirement is immediate.
Disclosure and regulation
Switzerland is our home market, and the Lombard loan is a Geneva tradition — the very word Lombard descends from the merchant-bankers whose craft the private banks here refined. A pledge of SIX-listed shares leaves ownership and the vote with the client; disclosure turns on FINMA rules under FMIA Article 120, where a significant holder reports at 3%, 5% and higher steps up to 66.67%. Because a Lombard advance does not itself shift beneficial ownership, it usually sits below that machinery. For a client near a threshold, we document the credit so that even an unwind respects Swiss disclosure and the discretion this market is known for.
The legal form of the security
Security over Swiss listed shares is a pledge, but the modern route runs through the intermediated securities legislation rather than the Civil Code rules written for paper certificates, so a securities-backed loan is documented as a pledge of the account balance together with a control agreement. Two Swiss features deserve early attention. Registered shares of many issuers carry transfer restrictions, or Vinkulierung, meaning the company can decline to enter a transferee in the share register or cap the votes attaching to a block — which shapes what enforcement can actually deliver. And private realisation outside formal debt-enforcement proceedings may be available where properly agreed. Both points, the issuer’s articles and the realisation clause, are questions to settle with Swiss counsel before drawing.
Custody and how security is taken
Swiss listed shares are held as intermediated securities under the Federal Intermediated Securities Act, credited to accounts with a custodian and ultimately with SIX SIS, the Swiss central securities depository, which settles on its SECOM platform. That statute matters for share-backed financing because it sets out how a security interest is taken: by crediting the pledged securities to an account in the secured party’s name, or — more usual for a private client who wants nothing to move — by an irrevocable control agreement with the custodian, under which the bank agrees to follow the lender’s instructions without further reference to the holder. The client keeps the position, the dividends and the vote throughout.
Currency and cross-border considerations
The Swiss franc is fully convertible, with no exchange controls, no approval requirement for a non-resident to hold or pledge Swiss shares, and no restriction on moving loan proceeds out of the country. The Swiss National Bank runs policy without capital-flow measures. Switzerland’s role as the largest cross-border wealth centre also makes multi-currency lending routine: a facility secured on a SIX-listed holding can be drawn in francs, euros, sterling or dollars according to where the borrower actually spends, with any mismatch between collateral currency and drawing currency sized deliberately rather than by accident. Swiss dividends are paid net of federal anticipatory tax, reclaimable in whole or part under treaty, which affects the cash pledged securities throw off.
Tax questions to put to your adviser
Put these to a Swiss tax adviser rather than treating them as settled. Does the Swiss securities transfer stamp duty bite on moving pledged shares into a lender-controlled account, on an enforcement sale, or on the re-transfer at repayment, and does the involvement of a Swiss securities dealer change the answer? How is federal anticipatory tax on dividends handled while the shares sit pledged, and who files the reclaim? For a Swiss-resident individual, does the borrowing touch the private-wealth treatment of capital gains, or the risk of being characterised as a professional securities trader? And for a non-resident borrower, is any Swiss withholding engaged on the interest paid?
General information only — not tax advice. Treatment turns on your own circumstances and residence, and on law that changes.
An illustrative example
By way of illustration, a private client with a large-cap SIX position — say one of the pharmaceutical or food names that anchor the SMI — might arrange a Lombard loan against it rather than sell. The holding stays in the client's name, dividends and voting rights continue, and nothing is sold. The advance can be drawn in Swiss francs or in the currency where the family's commitments lie. We quote no loan-to-value in advance, because the advance follows the collateral: the liquidity and average traded volume of the specific line, its price volatility, the free float behind it, how concentrated the position is against the issuer and within the client's wealth, any transfer restriction in the issuer's articles that would shape a realisation, and the currency drawn against a franc-denominated holding. A diversified portfolio of blue chips supports a materially different advance from one concentrated small-cap line, and the question is answered only once the actual holdings have been reviewed. Illustrative only, sketching the shape of a facility rather than any quoted rate, advance or term.
Illustrative only — not an offer, a quotation, or a commitment to lend.