Guide
What is a Lombard loan?
A Lombard loan lets you raise cash against assets you already own, without selling them. Here is how it works, what it costs, where the risks lie, and how the same idea applies to crypto.
A Lombard loan is a loan secured by assets you pledge to the lender, historically shares and bonds and today also crypto-assets. You keep ownership of those assets and any gain they make, receive cash, and get them back in full once the loan is repaid.
The short answer
Think of it as a pawn loan for investors. Instead of selling an asset to raise money, you lend it to the lender as security, the way a homeowner pledges a house for a mortgage. Because the loan is secured by something easy to value and easy to sell, the lender does not need to assess your income or run a credit check: the collateral does the work.
- You keep the asset. It is pledged, not sold, so you keep its upside and avoid a sale.
- You borrow a share of its value, called the loan-to-value ratio (LTV) or lending value.
- You repay when it suits you. Most Lombard loans are flexible credit lines; fixed terms also exist.
- The lender is protected by margin calls and, as a last resort, by selling part of the collateral.
Where the name comes from
From the twelfth century onwards, merchant-bankers from Lombardy, in northern Italy, financed trade across Europe by lending against pledged goods. They settled in the great commercial cities, and in London the street where they did business still bears their name: Lombard Street, in the heart of the City.
The word stuck. In German and Swiss banking, a Lombardkredit is a loan against securities, and central banks long called their rate for lending to banks against collateral the Lombard rate. Today, “Lombard loan” is the standard private-banking term for any loan secured by a portfolio.
A word with history
“Bankrupt” is said to come from banca rotta, the broken bench of a money-lender who could no longer honour his commitments. A Lombard lender’s first duty is to keep the pledge intact, which is why we never lend, stake or reuse our clients’ collateral.
How a Lombard loan works
Every Lombard loan rests on four elements.
1. The collateral and its lending value
The lender assigns each asset a lending value: the share of its market value it is prepared to lend against. The more stable and liquid the asset, the higher the lending value. In traditional private banking, lending values typically look like this, although each bank sets its own:
| Collateral | Typical lending value | Why |
|---|---|---|
| Cash and money-market funds | 80–95% | Almost no price risk |
| Investment-grade bonds | 60–90% | Low volatility, depends on maturity and rating |
| Large-cap shares and diversified funds | 50–70% | Liquid, but prices move |
| Small caps, concentrated positions | 0–40% | Harder to sell quickly |
| Bitcoin at Lombard Private | up to 60% | Highly liquid around the clock, but volatile |
Indicative ranges observed in private banking; they vary by institution and by asset.
2. The loan-to-value ratio
Your loan-to-value ratio is simply what you owe divided by what your collateral is worth. Borrow 25,000 against collateral worth 50,000 and your LTV is 50%. It moves every time the collateral’s price moves, which is why lenders watch it continuously. Our guide to loan-to-value explains it in detail.
LTV = amount owed ÷ market value of the collateral
3. Interest
Interest is charged on the amount you actually owe, usually accrued daily and paid monthly or when the loan ends. Because the loan is secured, rates are generally lower than for an unsecured personal loan of the same size, and they tend to fall as the loan-to-value falls.
4. Margin calls and liquidation
If the collateral loses value, the LTV climbs. At a first threshold, the lender asks you to restore the cushion: this is the margin call. You can add collateral or repay part of the loan. If the ratio keeps climbing to a second threshold, the lender sells part of the collateral to bring it back down: this is the liquidation. The thresholds, the time you are given to act and how much is sold are what separate a fair Lombard loan from a harsh one.
Crypto Lombard loans: same principle, new collateral
A crypto Lombard loan applies the same mechanism to bitcoin, ether or stablecoins. You transfer the crypto to the lender as collateral, receive euros, dollars, pounds or Swiss francs in your bank account, and get the crypto back when you repay. Three things change compared with a securities-backed loan.
Markets never close
Crypto trades 24 hours a day, every day. Prices can move on a Sunday night, so monitoring and alerts must run continuously too.
Lower loan-to-values
Crypto is more volatile than a bond portfolio, so lending values are lower: 30% to 60% for bitcoin with us, rather than 70–90%.
Collateral you can verify
On a blockchain, you can check that your pledged coins are still there, at their own address, without having to take anyone’s word for it.
The fourth difference is the one that matters most: who holds your collateral and what they do with it. Some crypto lenders lend pledged coins on to third parties to earn extra yield, a practice called rehypothecation. When markets turned in 2022, several of them could not return their clients’ collateral. A Lombard loan worthy of the name keeps the pledge segregated and untouched.
Lombard loan or another kind of loan?
| Lombard loan | Mortgage | Personal loan | Selling the asset | |
|---|---|---|---|---|
| Secured by | Assets you pledge | The property | Nothing | — |
| Credit check | Usually not, the collateral suffices | Yes, income and history | Yes | — |
| Time to cash | Hours to days | Weeks | Days | Days |
| Use of funds | Free | The property | Usually free | Free |
| Repayment | Flexible | Fixed schedule | Fixed schedule | — |
| You keep the asset’s upside | Yes | Yes | Yes | No |
The comparison that usually matters is the last column. Selling ends your exposure to the asset and, in many countries, triggers a taxable disposal. Borrowing against it keeps both your position and your options. Our guide Borrow or sell? works through the numbers.
What it costs
The cost of a Lombard loan is the interest, plus any fees. Look at the all-in annual percentage rate (APR) rather than a headline rate, and check for arrangement, custody, administration and early-repayment fees, which can add up.
At Lombard Private, the rate depends only on your loan-to-value, and there are no other fees to borrow or repay:
| Bitcoin loan-to-value | All-in APR |
|---|---|
| Up to 30% · Conservative | 8.9% |
| Up to 50% · Balanced | 10.9% |
| Up to 60% · Max liquidity | 12.9% |
Representative example: borrowing €10,000 for 12 months against bitcoin at 50% loan-to-value, at 10.9% APR with interest paid monthly, costs €90.83 a month, €1,090.00 in total. Repay after three months and you pay three months of interest, nothing more. See all rates and the fee schedule.
The risks, honestly
A Lombard loan is a sensible tool when it is used with a cushion. Its risks are well understood, and you should weigh each one before borrowing.
- Market risk. If your collateral falls in value, you may face a margin call and, ultimately, the sale of part of it, possibly at a low point.
- Over-borrowing. The maximum loan-to-value is a ceiling, not a target. The lower your LTV, the more the price can fall before anything happens.
- Custody risk. Your collateral is only as safe as the way it is held. Ask whether it is segregated and whether it can be lent on.
- Tax. Borrowing is generally not a disposal, but a liquidation may be. Rules differ from one country to another.
- Currency risk. If your collateral and your loan are in different currencies, exchange-rate moves change your LTV too.
How we limit the damage of a downturn
At Lombard Private, early warnings appear in your client area from 65% loan-to-value. A margin call comes at 70%, with 72 hours to act. At 80%, only enough collateral is sold to return to 65%. Read our liquidation policy and risk disclosure.
What people use a Lombard loan for
Because the money is free to use and arrives quickly, Lombard loans tend to cover needs that are large, time-sensitive or temporary:
- A property depositSecure a purchase without selling at the wrong moment.
- A tax billPay on time and keep your position intact.
- Business cash flowBridge payroll, stock or a late invoice.
- Bridge financingCover the gap until another sale completes.
Getting a crypto Lombard loan with Lombard Private
We built Lombard Private to offer the private-bank version of this product to crypto holders, without the private-bank paperwork. You do not give us your name, your email or your phone number: your account is a 16-digit number. You choose your terms, pledge your collateral to an address created for your loan, and receive your money by bank transfer, typically within the hour. See how it works step by step.
Questions
Lombard loans: common questions
Short answers to the questions we are asked most often.
Help centreWhat is a Lombard loan in simple terms?
A Lombard loan is a loan secured by assets you already own, such as securities or, at Lombard Private, crypto-assets. You pledge the assets as collateral, receive cash, keep ownership and any future gains, and get the assets back once the loan is repaid.
Why is it called a Lombard loan?
The name comes from the merchant-bankers of Lombardy, in northern Italy, who lent against pledged goods across medieval Europe. London’s Lombard Street is named after them, and central banks long called their rate for loans against securities the Lombard rate.
How much can I borrow with a Lombard loan?
It depends on the lending value of your collateral, expressed as a loan-to-value ratio. Banks typically lend more against stable assets such as government bonds than against shares. For crypto-assets, Lombard Private lends up to 60% of the value of bitcoin, 50% for ether and 80% for USDT and USDC.
Do I have to repay a Lombard loan on a fixed schedule?
Not necessarily. Many Lombard loans are credit lines with no fixed term: you pay interest and repay the principal when you choose. Fixed-term versions also exist. At Lombard Private you can repay at any time, in full or in part, without a fee.
What happens if the value of my collateral falls?
Your loan-to-value rises. Past a set threshold, the lender issues a margin call: you add collateral or repay part of the loan. If nothing is done and the value keeps falling, part of the collateral is sold to bring the ratio back down. At Lombard Private the margin call comes at 70% with 72 hours to act, and only enough is sold to return to 65%.
Is a Lombard loan the same as a margin loan?
They rest on the same principle, a loan secured by assets. A margin loan is usually used to buy more of the same assets inside a brokerage account, whereas a Lombard loan typically funds needs outside the portfolio, such as a property purchase or a tax bill.
Keep your crypto. Get the cash.
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