Lombard loans and wealth financing

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Swiss banks have long offered credit secured by a client's securities portfolio, commonly called a Lombard loan. It allows clients to obtain liquidity without selling investments, which can be useful for bridging, opportunistic purchases or tax-efficient planning. The flexibility comes with risks that should be understood before any drawdown.

How a Lombard loan works

The client pledges the assets held in their custody account to the bank, and the bank grants a credit facility up to a lending value calculated on those assets. The facility may be drawn as a fixed advance with an agreed term or as a current account overdraft. Interest is usually linked to a reference rate plus a margin, and the pledge typically covers the entire account, including assets added later.

Lending values and loan-to-value

Each bank applies its own lending values, expressed as a percentage of the market value of each asset. High-quality bonds and diversified funds generally receive higher lending values than individual equities, while concentrated positions, less liquid instruments or securities of smaller issuers may receive a low value or none at all. Foreign currency mismatches between the loan and the collateral can also reduce the available credit. The resulting loan-to-value ratio changes daily with market prices.

Margin calls

If market values fall and the loan exceeds the permitted lending value, the bank will ask the client to provide additional collateral or reduce the loan, often within a short period. If the client does not respond in time, the credit agreement usually allows the bank to sell pledged assets, potentially at unfavourable prices. In volatile markets, this can crystallise losses that a patient investor would otherwise have been able to sit out. Clients who are travelling or difficult to reach should agree on clear communication channels in advance.

Using Lombard credit for real estate or business

Some clients consider using a Lombard loan to finance property or to inject capital into a business. Caution is advisable in both cases. Property and business investments are illiquid, while the loan remains exposed to daily market fluctuations, so a downturn in securities markets could force sales at the worst moment. For Swiss real estate, mortgage lenders examine the origin of the equity contribution, and borrowed funds may not be accepted in the same way as the purchaser's own assets. For business funding, the loan and the business risk can compound each other.

What pays off in practice

Borrow well below the maximum lending value to leave a buffer against market downturns.
Match the currency of the loan to your income or the collateral where possible to limit exchange-rate risk.
Plan the exit before drawing and decide how the loan will be repaid if markets move against you.

How Ressos Legal helps

I advise clients on the structuring of Lombard and wealth financing, review credit and pledge agreements, and assist in disputes about margin calls or forced sales. Contact me for a first conversation.

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of October 2026.

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Dr Alexander Ressos, TEP

Rechtsanwalt/Attorney-at-Law

I am a Swiss attorney-at-law and also admitted as a solicitor in Hong Kong and in England & Wales, with almost 25 years of experience.

Together with my multilingual team, including Chinese, Japanese, Korean, Russian, Ukrainian and French native speakers, I advise companies and their owners from around the world on the full range of banking, corporate, commercial and tax law matters in Switzerland, including international tax planning, fiduciary services, and legal family office services including immigration & relocation or real estate investments. My practice has a particular focus on clients from growth and frontier markets in Greater China, Central Asia and the Caucasus, the rest of Asia, the Middle East, Africa and Latin America, and I equally advise clients from Europe and North America. Through an affiliated Swiss trust company, we also take care of the incorporation and ongoing administration of their companies and other structures, including accounting, tax returns and corporate secretarial services, and I serve as a professional director where required. With the support of a network of first-class cooperation partners, I also implement solutions worldwide.

My approach is to act as a trusted advisor who works directly with decision-makers, on an equal footing: I start from what you want to achieve and shape every structure, contract and tax decision around your commercial goals and how it improves your after-tax return. As “lawyers who make it happen”, my team and I stay involved until your company is set up, your structure is in place and your transaction has closed, and we remain available for any follow-on work that may be required. You benefit from bespoke solutions and personal attention, and sound, friendly and practical advice. We are not the lowest-cost provider in the market, nor do we intend to be; our aim is to deliver well-founded, proper solutions and excellent value for money.

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