Lombard loan

A lombard loan (or lombard credit) is a type of secured loan, in which the entire loan amount is secured by a deposit.

Swiss lombard loans can be secured by money held in bank accounts, life insurance policies, securities (like stocks or bonds) or other assets.

Lombard loans come with varying loan terms. In Switzerland, it is even possible to get a lombard loan with no fixed loan term. In this case you as the borrower decide when you want to repay the loan.

The loan-to-value ratio is usually shown as a percentage and depends on the type of assets which make up your deposit. Interest rates can also vary over the life of your loan, depending on the growth in value of your deposits and general market conditions.

Swiss banks have minimum loan requirements, which are normally 25,000 to 100,000 francs (or equivalent assets). The maximum lombard loan you can get will vary depending on your customer profile.

In Switzerland, lombard loans are widely used in securities trading and as an investment tool. Investors and traders should note that lombard loans come with a fair amount of risk. If things don’t go as planned, you can lose your entire deposit on top of your trading losses. In the worst case, you risk losing everything.

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Expert Benjamin Manz
Benjamin Manz is CEO of moneyland.ch and an independent expert on banking and finance.