Deployed as such, it may serve to cover margin requirements to account for market fluctuations. The proceeds of such loans can be reinvested in a diversified portfolio, serving as additional collateral. Such a portfolio diversifies risk and offers the opportunity to enhance investment yields without compromising your overall investment strategy. Contact Are you interested in learning more about our wealth management?
Contact Us. True Connections Podcast. Wealth Planning. Sometimes we can drive a little faster, while at other times circumstances require us to slow down — the objective is always to get home safely. Leverage can be used in its very basic form to gain financial flexibility and to make use of your capital as efficiently as possible and in a way that provides the best possible outcome.
This is why tailor-made Lombard loans, which provide a flexible and efficient solution, can be a useful and powerful tool to support you in attaining your investing, financing, or hedging objectives. For both cases, tailor-made Lombard lending solutions can help increase your financial flexibility, whether you are an individual investor or a corporate entity. Lombard loans are a simple, quick, and convenient way to cover your liquidity needs by borrowing against your bankable assets booked with the bank.
A Lombard loan can be considered a flexible credit facility. The cash received under a Lombard loan can be used for multiple purposes, which you may or may not adjust during the course of the borrowing period. In other words, the bank grants the Lombard loan purely based on the existing portfolio booked with and pledged to the bank, and not based on the intended or actual purpose s mentioned below e.
Lombard-loan based lending solutions can be as diverse as your needs While each personal situation varies, a Lombard loan can help you increase your financial flexibility to ensure that you have the cash you need to meet your financial requirements and take advantage of investment-related opportunities. Mind the gap - beware of the risks With a Lombard loan you are exposed to both the greater fluctuations in the value of your investment and the fluctuation in the value of your bankable assets, which are used as the collateral for the Lombard loan, and are themselves subject to market, credit, and liquidity risk unless you provided cash.
When considering a Lombard loan for your investment portfolio, we advise you to look at your overall financial situation, including any possible tax consequences. Please also consider your risk profile for your total assets, including those held at other financial institutions, as well as your overall investment objectives.
Borrow only if you can repay! Summary In conclusion, Lombard loans can be used as a tool kit to enhance your financial flexibility. By borrowing against your bankable assets, you can get access to additional funds in a simple, quick, and convenient way.
You can use these to benefit from investment-related opportunities or to satisfy your financing requirements. In short, you can use the funds at your discretion and even change the purpose during the tenor of the Lombard loan.
In the process it is vital to use Lombard loans prudently and consciously in order to successfully attain your investing, financing, or hedging objectives. Create a personalised ads profile. Select personalised ads. Apply market research to generate audience insights. Measure content performance. Develop and improve products. List of Partners vendors. The Lombard rate is the interest rate charged by central banks when extending short-term loans to commercial banks.
Traditionally, it refers to loans that are backed by specific collateral. The term originates from the Lombardy region of Italy, which has a rich history of banking houses dating back to the Middle Ages. Today, it is mainly associated with the Bundesbank , the central bank of Germany.
Historically, the Lombard rate was associated with the banking houses of Italy's Lombardy region, who were famous for their pledged collateral loans. Some sources tie the term's history to the Bardi banking family, which started in Lombardy and built the Compagnia dei Bardi banking house. This family also operated a Paris office known as the Maison de Lombard, which specialized in pledged collateral loans. These loans became popular throughout Europe, causing the Lombard rate to become a common term among the continent's banking community.
In Germany, the Lombard rate came to be known as the "lombardsatz," and was considered a key financial market indicator. As Germany's economic importance in Europe grew, the Lombard rate became one of the key financial metrics of Europe.
In recent times, references to the Lombard rate have become less common, replaced by the interest rates published by the European Central Bank ECB.
However, the old terminology is still used by some European countries. For instance, Poland continues to reference the Lombard banking tradition in a variety of ways, with terms such as "Lombard loans," "Lombard rate," and "Lombard facility" remaining in common usage. Today, the Lombard rate applies mainly to European banks, where it occupies a similar role as the discount rate used by the Federal Reserve in the U. In Europe, the Lombard Rate is typically set to about 0.
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