What is a Lombard loan?

A specific type of financing

A Lombard loan is a financing solution based on a simple principle: borrowing against your financial assets as collateral.

Unlike a mortgage, which is secured by real estate, a Lombard loan is typically backed by:

• a portfolio of securities,

• invested assets,

• or other financial holdings.

How does a Lombard loan work?

A Lombard loan is based on pledging financial assets.

In practice:

• you pledge assets to the bank as collateral,

• the bank grants you a credit line,

• the amount available depends on the value and type of pledged assets.

Your assets remain invested, but they serve as collateral for the financing.

When can a Lombard loan be used?

A Lombard loan can be used in various situations, including:

• financing a project without selling investments,

• accessing liquidity quickly,

• optimising overall wealth management.

It is a flexible tool, often used as part of a broader wealth strategy.

Advantages of a Lombard loan

A Lombard loan offers several benefits.

Preserving your investments

It allows you to:

• avoid liquidating financial assets,

• maintain exposure to financial markets.

Access to liquidity

A Lombard loan can generally be arranged relatively quickly.

This makes it suitable for short-term or opportunistic financing needs.

Flexibility of use

The available credit can be used for different purposes, depending on your needs.

Risks to consider

A Lombard loan also involves risks that should be carefully assessed.

Market sensitivity

The value of the pledged assets may fluctuate.

In the event of a market downturn:

• the collateral value decreases,

• the bank may request additional guarantees (margin call).

Leverage effect

Using borrowed funds secured by financial assets can amplify:

• potential gains,

• but also potential losses.

A prudent approach is essential.

Integrating Lombard financing into your overall strategy

A Lombard loan should not be considered in isolation.

It should be part of a broader reflection including:

• your overall wealth situation,

• your risk tolerance,

• your financial objectives.

The objective is to balance liquidity, performance and security.