Lombard loans: finance a project without selling your portfolio?

What does pledging a portfolio mean?

Assets accepted by the lender secure the loan. The portfolio remains exposed to market movements: pledging it does not protect its value. The terms specify eligible assets, their availability and the lender’s rights. The amount available to borrow therefore does not necessarily equal the portfolio’s market value.

Market value and lending value: two different figures

The lender applies its collateral criteria to determine a lending value. Portfolio composition, security liquidity and risk may affect the calculation. Ask how these values are reviewed and whether changes to the criteria can reduce borrowing capacity even when no securities have been sold.

Illustrative example: a fall in portfolio value

Assume a €1,000,000 portfolio and, solely for this example, a lending value of 50% of its market value. The calculated capacity would be €500,000. With €400,000 borrowed, the initial headroom would be €100,000. This 50% rate is neither an offer nor a market standard.

If the portfolio falls to €700,000 and the rate stays unchanged, the lending value becomes €350,000. The loan then exceeds that value by €50,000. Repaying €50,000 would restore equality in this simplified model. Adding €50,000 of securities would not necessarily have the same effect: their lending value may be below their market value.

The example excludes interest, fees, currencies and contractual trigger thresholds. It explains a mechanism, not the timing or amount of an actual margin call. Those details must be confirmed by the lender.

A margin call can lead to a sale

If collateral becomes insufficient, the lender may request additional collateral or repayment. If the contractual requirements are not met, pledged assets may be sold. UBS Luxembourg explicitly describes this possibility. Keeping the portfolio initially therefore does not mean it can be kept under every circumstance.

Cost, term and repayment: the key questions

Ask whether the rate is fixed or variable, how interest is paid and which fees apply. If the debt, your income and the collateral use different currencies, have the currency risk explained. Check the loan term, renewal options, early repayment conditions and the lender’s termination rights.

For a property project, ask a concrete question: how would you meet a rapid repayment request when the property may take time to sell? Compare with property financing offered for the same project. Consider collateral, costs and timing without assuming either option will be available or preferable.

A Lombard loan does not provide guaranteed additional returns. The debt must be repaid even if investments disappoint. Before deciding, ask the professional to examine adverse scenarios and your ability to withstand them. XdC does not determine a suitable borrowing level for your circumstances.

Sources and references

• UBS Luxembourg: Lombard lending and risks
• UBS: lending value principles (Singapore documentation)
• Banque de Luxembourg: financing overview (French)

Sources consulted on 30 September 2026. The institutions cited are documentary references; their mention does not imply a partnership or recommendation.