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Lombard loans in Luxembourg: liquidity without selling your portfolio
The Lombard loan is one of the classic tools of private banking: it lets you access liquidity using your portfolio as collateral, without unwinding your investments. In Luxembourg it is a common solution for large estates.
What a Lombard loan is
With a Lombard loan, the bank grants you financing secured by the financial assets you hold on deposit. Instead of selling to raise cash — with the tax and opportunity cost that entails — you pledge the portfolio and keep your investment position intact.
What it is used for
- Seizing an opportunity without selling assets you want to keep.
- Covering a one-off liquidity need (a project, a transaction).
- Diversifying into another investment by leveraging the existing portfolio.
- Optimising the treasury of a family or business estate.
How loan-to-value works
The bank assigns each asset a financing percentage according to its quality and liquidity: high-quality bonds support high ratios, while equities or more volatile assets receive more conservative percentages. The total defines the credit available.
The cost is referenced to an interest rate plus a spread. It should always be weighed against the alternative of selling and against your investment horizon.
Risks to bear in mind
The main risk is the margin call: if the portfolio falls below the agreed threshold, the bank may demand additional collateral or liquidate positions, possibly at a bad moment in the market. That is why the Lombard loan is a tool for those who understand leverage and keep a safety cushion.
Who it makes sense for
It suits investors who already hold a significant private banking portfolio in Luxembourg and want financial flexibility without giving up their strategy. We assess it case by case, adjusting the amount and the cushion to your profile.
Frequently asked questions
What is a Lombard loan?
It is financing that uses your investment portfolio (funds, bonds, equities) as collateral. It lets you obtain liquidity without selling the assets and therefore without interrupting your investment strategy.
How much can I borrow?
It depends on the value and composition of the portfolio. The bank applies a different financing percentage (loan-to-value) depending on the asset type: higher for quality bonds, lower for equities or more volatile assets.
What are the risks?
If the value of the portfolio falls below a threshold, the bank may request additional collateral or the sale of assets (margin call). It is a tool for profiles who understand and can bear that risk.
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Book a no-obligation call and we will look together at whether investing in Luxembourg fits your wealth.
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