14th February 2022

Lombard Loan: the flexible financing solution without limits

Holding a portfolio consisting of financial assets, and then having to sell it in part or in full in order to have access to cash on an ad hoc basis, can lead to real disappointment. By proceeding in this way, you admittedly have access to the cash you need, but you are also foregoing the potential gains of your financial investments. In this article, Fred Kutten, Deputy Head of Business Unit Private Banking at Spuerkeess, explains how a Lombard loan can be a solution that will save you a lot of regrets.

A guarantee without loss of capital gain

Although many people are unaware of it, there is a solution that offers you the benefit of keeping your investment portfolio, and therefore maintaining the capital gain potential, while meeting the one-off cash needs that you may have. This solution is called Lombard loan.

Considered as an alternative to traditional financing methods, the Lombard loan enables you to increase your financial flexibility by pledging your portfolio of liquid securities, such as investment funds. You therefore retain the value of your securities without having to part from them.

In other words, it is a loan, or rather a variable-rate credit facility with a fairly short duration of between 1 and 3 years, renewable, which is granted in return for the pledging of a portfolio consisting of liquid securities.

Financing virtually without limits

From there, the financing possibilities are virtually without limits! Of course we adopt a prudent approach. The cash made available to you under the Lombard loan enables you either to seize an investment opportunity outside of banking (for example, a property project), or to realise one of your most cherished dreams (swimming pool, travel, car, etc.), or to capitalise on a lever to further invest in liquid securities and therefore take advantage of opportunities that could arise in the financial markets. In other words, you can use the amount of the loan at your convenience.

If the financing is intended for the acquisition of a property asset and this is located abroad, it is possible to use hybrid financing, where part of the acquisition is financed by a Lombard loan and the other part by a traditional mortgage loan.

Discretionary management for more comfort

The combination favoured by our clients is often to add our discretionary management solution Activmandate when putting in place a Lombard loan. However, whether you have opted for Activmandate or for any other investment solution (Selfinvest, Activinvest, Activinvest Plus), this combination still enables you to benefit from advantageous conditions for this type of financing.

To find out more about flexible Lombard loan financing, please contact our Private Banking department.

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