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A lombard loan or securities backed credit

A loan with your investment portfolio as collateral

Lombard loan or
Securities backed credit

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  • Available from a minimum loan amount of € 200,000.
  • Minimum term of 1 year and maximum term of 5 years.
  • Flexibility to choose between an instalment loan or a bullet loan.
  • Suitable for both private individuals and companies.
  • Your financial instruments are pledged as collateral on an ABN AMRO account.

Have you decided to invest in that beautiful villa in the South of France, to work on that long-postponed renovation, to install a swimming pool or tennis court or to buy that classic car or work of art you’ve dreamt of for so long?

If so, a Lombard loan or securities backed credit could be an attractive financing option if you have an investment portfolio.

What exactly is a lombard loan or securities-backed credit?

If you borrow from a bank, the bank will require guarantees as collateral for the repayment of the loan. For example, with a mortgage loan, the property itself serves as collateral. A Lombard loan works in the same way, but you provide your investment portfolio as collateral rather than a house. That might include instruments such as bonds, investment funds, shares, structured products or liquid assets, for example. This means you cannot sell or transfer them to another financial institution without ABN AMRO's approval. 

Tip
A Lombard loan or securities backed credit with ABN AMRO

At ABN AMRO Private Banking we believe in customised service. Before approving any loan, we carefully review the application to ensure that it’s entirely consistent with your financial situation, needs and wishes. By doing so, we can always offer you a loan that is suitable.

The amount you can borrow through our Lombard loan depends on your portfolio and the underlying assets. For example, high-quality bonds are valued at a higher collateral value than shares. Your portfolio’s diversification will also affect the collateral value: the greater the spread, the less chance there is of extreme fluctuations. Your credit expert will always perform a thorough analysis in order to calculate the exact collateral value of your investment portfolio.

Your financial security guaranteed

At ABN AMRO Private Banking, we understand the importance of caution and protection when it comes to determining how much can be lent to our clients. Our approach goes further than just assessing your investment portfolio’s collateral value: we also consider market volatility and unexpected events. That’s why we apply carefully calculated criteria to ensure that the amount of your loan is in line with your needs and comfort zone.

Our goal is not just to give you access to financial resources, but also to ensure that you have financial stability and peace of mind, no matter what the future may bring.

Why choose a Lombard loan?
  • No mortgage costs
    If you’re buying property, there are no mortgage costs associated with the Lombard loan, as with a mortgage loan, since your investments serve as collateral rather than the property. You also avoid certain other aspects of a mortgage, such as the need to take out outstanding balance insurance.
  • A practical and convenient process
    A Lombard loan gives you access to your liquid assets by means of a simple process; by contrast, arranging a mortgage is often a complex matter.
  • Ideal for foreign property purchases
    A Lombard loan is a potential solution for purchasing property abroad, as taking out a mortgage abroad can be complicated.
The risks of a Lombard loan

Your financial instruments are taken as collateral on an ABN AMRO account, which means that you cannot simply buy, sell or transfer them without ABN AMRO’s permission.

However, our experts in discretionary portfolio management and investment advice will continue to actively manage your investments during the term of the Lombard loan, so you will still benefit from their expertise and advice.

This means that, even though the investment portfolio has been pledged, you can still enjoy a possible return. Bear in mind that this return may be lower than the cost associated with the loan.

If during the term of the loan the collateral value turns out to be lower than the loan value, ABN AMRO will ask you to provide additional collateral; if you are unable to do so, the bank may sell some or all of your financial instruments. This could happen at a time when market conditions are unfavourable

A Lombard loan or securities backed credit with ABN AMRO
Your financial security guaranteed
Why choose a Lombard loan?
The risks of a Lombard loan

A Lombard loan or securities backed credit with ABN AMRO

At ABN AMRO Private Banking we believe in customised service. Before approving any loan, we carefully review the application to ensure that it’s entirely consistent with your financial situation, needs and wishes. By doing so, we can always offer you a loan that is suitable.

The amount you can borrow through our Lombard loan depends on your portfolio and the underlying assets. For example, high-quality bonds are valued at a higher collateral value than shares. Your portfolio’s diversification will also affect the collateral value: the greater the spread, the less chance there is of extreme fluctuations. Your credit expert will always perform a thorough analysis in order to calculate the exact collateral value of your investment portfolio.

Your financial security guaranteed

At ABN AMRO Private Banking, we understand the importance of caution and protection when it comes to determining how much can be lent to our clients. Our approach goes further than just assessing your investment portfolio’s collateral value: we also consider market volatility and unexpected events. That’s why we apply carefully calculated criteria to ensure that the amount of your loan is in line with your needs and comfort zone.

Our goal is not just to give you access to financial resources, but also to ensure that you have financial stability and peace of mind, no matter what the future may bring.

Why choose a Lombard loan?

  • No mortgage costs
    If you’re buying property, there are no mortgage costs associated with the Lombard loan, as with a mortgage loan, since your investments serve as collateral rather than the property. You also avoid certain other aspects of a mortgage, such as the need to take out outstanding balance insurance.
  • A practical and convenient process
    A Lombard loan gives you access to your liquid assets by means of a simple process; by contrast, arranging a mortgage is often a complex matter.
  • Ideal for foreign property purchases
    A Lombard loan is a potential solution for purchasing property abroad, as taking out a mortgage abroad can be complicated.

The risks of a Lombard loan

Your financial instruments are taken as collateral on an ABN AMRO account, which means that you cannot simply buy, sell or transfer them without ABN AMRO’s permission.

However, our experts in discretionary portfolio management and investment advice will continue to actively manage your investments during the term of the Lombard loan, so you will still benefit from their expertise and advice.

This means that, even though the investment portfolio has been pledged, you can still enjoy a possible return. Bear in mind that this return may be lower than the cost associated with the loan.

If during the term of the loan the collateral value turns out to be lower than the loan value, ABN AMRO will ask you to provide additional collateral; if you are unable to do so, the bank may sell some or all of your financial instruments. This could happen at a time when market conditions are unfavourable

Lombard loan: an example

Ms Peeters has an aggressive ESG Investments Mandate worth € 1,000,000. She would like to finance the purchase of a second home on the Belgian coast. The purchase price of this property is € 630,000. To finance this, she takes out a Lombard loan (in this example: a bullet loan with an interest rate of 4.5%).

For illustration purposes, we have worked out four scenarios that could apply to Ms Peeters during the period of her loan.

Scenario Positive Neutral Negative Stock market correction
Return on the mandate +8.0% +4.5% +2.0% -14.0%
Portfolio value after 1 year € 1,080,000 € 1,045,000 € 1,020,000 € 860,000
Portfolio collateral value (70%) € 756,000 € 731,500 € 714,000 € 602,000
Lombard loan interest rate * 4.5% 4.5% 4.5% 4.5%
Return after deduction of loan interest rate 3.5% 0.0% -2.5% -18.5%
Result The return on the portfolio is higher than the interest rate on the loan. The return on the portfolio is equal to the interest rate on the loan. The return on the portfolio is lower than the interest rate on the loan. The portfolio’s collateral value has dropped below the loan amount. .

* Administration costs may also be charged.

If the mandate decreases by more than 10%, the portfolio’s collateral value will drop below the loan amount. At that point, Ms Peeters will be asked to make additional deposit. If this is not possible, she will have to sell part of her portfolio (liquidities in EUR are covered for 100%). Naturally, this is a situation that we want to avoid at all times, as we do not want clients to be forced to leave the market. At ABN AMRO, we will therefore always ensure that sufficient reserves are requested at the start of the loan to absorb such stock market corrections – both as a precaution and to ensure that you are properly protected.

Want to know more?

Do you have a question about the possibilities or would you like to get to know us without any obligation? Then please contact us.

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