Is a Lombard loan the same as securities-backed lending?

Securities-backed lending (SBL) is credit advanced against a pledge of listed shares or a diversified securities portfolio. The borrower pledges the securities as collateral, draws a cash advance equal to a fraction of their market value — the loan-to-value, or LTV — retains ownership of the assets, and recovers them in full on repayment. It is the same instrument a private bank calls a Lombard loan; "share-backed loan" is a third name for it.

What securities-backed lending is — and its other names

Securities-backed lending describes any loan whose security is a portfolio of marketable securities rather than property, a business, or a personal guarantee. The lender takes a pledge over the securities; the borrower takes cash. Because the collateral is liquid and continuously priced, the lender can size and monitor the advance with precision, and the borrower can raise liquidity quickly without disturbing the underlying position.

The same instrument travels under several names. Private banks and the Continental European tradition call it a Lombard loan, after the medieval Lombard merchants who lent against pledged goods. Anglo-American markets tend to say securities-backed lending, securities-based lending, or a share-backed loan. The label changes; the structure does not. Throughout this page, treat the terms as interchangeable.

How the mechanics work

The sequence is 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 borrower pays interest on the drawn amount for the term of the facility, and the pledged assets remain the borrower's property throughout. When the loan is repaid, the pledge is released and the borrower's control over the assets is once again unencumbered.

Because the securities are pledged rather than sold, the borrower keeps the economic exposure to the underlying, keeps the dividend and voting rights (subject to how the facility is structured), and does not trigger the disposal that a sale would represent. That is the defining feature of the instrument: liquidity now, position intact.

Loan-to-value: the size of the advance

The loan-to-value is the single most important figure in a securities-backed loan. It 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 drivers are consistent: the liquidity and free float of the collateral, its volatility, the size of the position relative to the market, the degree of single-name concentration, and the recourse profile. Indicative ranges are issued only after a review of the specific holdings; a fuller treatment sits on how much you can borrow against shares, and the firm publishes an indicative LTV calculator for a transparent first estimate.

Recourse: non-, limited-, and full-recourse

Securities-backed facilities are arranged across three recourse profiles, and the choice materially changes the terms. Under a non-recourse structure, the lender's only remedy on default is the pledged collateral; the borrower's other assets are ring-fenced, which is the most protective profile for the borrower and typically carries a lower LTV and a wider spread. A limited-recourse structure caps or conditions recourse beyond the collateral, balancing protection and pricing. Under a full-recourse structure, the borrower stands behind the loan in full, which supports a higher LTV and a tighter spread.

Custody and the security package

The pledged securities are held by a qualified custodian under arrangements designed to keep the lender's security clean and the borrower's ownership intact. The collateral is typically ring-fenced so that it is bankruptcy-remote from the lender, and the security agreement sets out how the assets are valued, when additional collateral may be called, and the circumstances in which the lender may realise the pledge. Good custody is not an afterthought — it is what makes the borrower's retained ownership meaningful.

Disclosure and regulatory considerations

Pledging shares can carry disclosure consequences. In many markets, holding or pledging a stake above a defined threshold triggers a notification obligation to the relevant regulator or exchange under major-shareholding and transparency rules. Whether a pledge is disclosable, and at what level, depends on the listing venue and the nature of the holding, so it is checked case by case for each transaction. Lombard Financing arranges facilities so that any applicable disclosure is identified early, and licensed activities are conducted through appropriately authorised entities in the relevant jurisdiction.

Securities-backed lending at a glance

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 from a confidential enquiry to funded capital in disciplined stages, and indicative terms typically follow within one or two business days. If you are weighing this against other options, the difference between a Lombard loan, a margin loan, and a stock loan is a useful next step.