Private Wealth and Lombard Financing

Lombard loans are a often underestimated means of leveraging a portfolio and are an attractive financing opportunity. 

A very flexible and in terms of type, amount, time frame and currency, individually structured financing solution is called Lombard loans. Lombard loans are securities loans against deposit and pledging of easily realizable collateral and assets.

Lombard loans are not only a key product in the Private Banking segment but are already increasingly linked to other private wealth management services such as real estate financing, securities safekeeping and/or asset management.  Lombard loans are expected to be the most attractive on-balance sheet product for Private Banking customers. We see further potential in the combination of various private wealth services and Lombard financing as the total customer numbers in this segment will rise significantly in the upcoming years. This positive growth forecast suggests that domestic banks will continue to benefit from high earnings potential in the future.

Lombard loans as an attractive financing opportunity

Lombard loans allow wealthy individuals or investment companies to secure their short-term liquidity need or even to exploit an investment opportunity without selling their assets, giving away the returns from the underlined pledges, or having to restructure their whole investment portfolio. By investing through a Lombard loan, individuals or investment companies are also able to optimize the earnings potential of their whole investment portfolio by way of diversification of investments.  In addition, Lombard loans are a cost-efficient financial solution to hedge against currency risks.

Banks when granting of Lombard loans are usually apply a highly risk-controlled process based on the following sustainable lending standards:

• Only selective instruments are accepted as collateral;
• There are lending limits of 25% to 70% of the value of collateral, depending on instruments posted of collateral.