Asia-Pacific educational guide
Lombard Loans: How Portfolio-Backed Credit Works
A Lombard loan is generally a credit facility collateralised by eligible marketable investments. It can turn a portfolio into liquidity without an immediate sale, but falling values can produce a margin call or collateral sale. The label does not determine recourse, eligible assets, or risk: the contract does.
The short answer
Lombard credit is commonly portfolio-based lending in which a bank or other provider assigns lending values to eligible equities, bonds, and funds. Diversification, liquidity, volatility, currency, and concentration influence how much collateral value is recognised. UBS's Singapore FAQ describes eligible collateral as a diversified portfolio that may include equities, bonds, and funds. That is a useful description, not a universal product standard.
How a Lombard facility works
1. Portfolio review
The provider assesses each asset, its liquidity, volatility, currency, and the portfolio’s concentration.
2. Lending values
Eligible assets receive provider-specific collateral values. Some holdings may receive no recognised value.
3. Drawdown
The borrower draws cash under the facility while the portfolio remains subject to custody and control arrangements.
4. Ongoing monitoring
Market prices, foreign exchange, eligibility, and concentration are monitored under the agreed maintenance rules.
5. Shortfall response
A margin call may require repayment or extra eligible assets. If unresolved, the provider may sell collateral.
6. Repayment or closure
The borrower repays amounts due and the collateral restrictions are released, subject to the documents.
J.P. Morgan Private Bank's Asia-Pacific explanation of securities-based lending highlights the central margin-call risk: if collateral value declines, additional collateral or repayment may be required, and assets may be sold when a call is not met.
What determines eligibility?
Asset type
Listed equities, investment-grade bonds, and eligible funds may be treated differently.
Liquidity
Trading depth and realistic exit capacity matter, especially for a large holding.
Concentration
A diversified pool is usually assessed differently from one dominant share position.
Volatility
Price variability and event risk can reduce recognised collateral value.
Currency
A mismatch between borrowing and collateral currencies can create an extra shortfall.
Legal and custody
Ownership, transferability, account control, and local restrictions affect structure.
Lombard loan, margin lending, and single-stock financing
| Feature | Lombard credit | Margin lending | Single-stock financing |
|---|---|---|---|
| Typical collateral | Diversified eligible portfolio | Brokerage-account investments | One principal listed holding |
| Common purpose | General liquidity, subject to terms | Investment or trading liquidity | Liquidity from a concentrated position |
| Monitoring focus | Portfolio value and composition | Account equity and maintenance margin | Issuer, liquidity, volatility, and concentration |
| Recourse | Often full recourse; documents govern | Commonly full recourse | May vary; never infer from the label |
| Main pressure point | Portfolio shortfall or eligibility change | Rapid margin call and forced sale risk | Single-name price and liquidity risk |
For a fuller vocabulary map, read the securities-backed lending terminology guide.
Margin-call scenario: the mechanics that matter
Suppose collateral values fall or a provider lowers an asset's recognised lending value. The result can be a shortfall even if the number of securities held has not changed. The borrower may have to add eligible assets or repay part of the balance within the contractual cure period. If the shortfall remains, sale rights may apply.
Ask what valuation source is used, whether eligibility can change, how currency movements are treated, how calls are delivered, how much time is available, whether the provider can sell without further notice, and whether the borrower remains responsible for a deficiency. A Lombard facility is not inherently non-recourse.
Asia-Pacific market considerations
The same label can sit over different custody, disclosure, ownership, and enforcement settings. These are practical questions to investigate, not summaries of local law.
| Market | Exchange | Practical considerations | Related guide |
|---|---|---|---|
| Hong Kong | HKEX | Concentrated founder holdings and connected cross-border wealth are common. Review share liquidity, custody, disclosure duties for substantial shareholders, dealing restrictions, and currency mismatch. | Read guide |
| Singapore | SGX | Private-bank portfolio facilities are common, but concentrated SGX positions may sit outside standard eligible lists. Compare portfolio haircuts, currency exposure, custody location, and treatment of distributions. | Read guide |
| Australia | ASX | Consider market depth outside the largest issuers, substantial-holder reporting, tax consequences, corporate actions, and whether a facility’s maintenance rules change for smaller-cap shares. | Read guide |
| Japan | TSE | Custody chains, documentation language, foreign-exchange exposure, settlement conventions, and the liquidity difference between Prime and smaller listings require careful review. | Read guide |
| Malaysia | Bursa Malaysia | Foreign-ownership constraints in relevant sectors, nominee or custody arrangements, substantial-shareholder disclosure, Shariah considerations where relevant, and ringgit exposure can affect structure. | Read guide |
| Thailand | SET | Foreign shareholding limits, local custody, voting or economic rights, disclosure thresholds, trading liquidity, and baht exposure should be assessed before shares enter a financing structure. | Read guide |
| Indonesia | IDX | Local custody and settlement, free-float and daily liquidity, rupiah exposure, issuer concentration, disclosure, and practical enforcement mechanics warrant jurisdiction-specific advice. | Read guide |
| Taiwan | TWSE | Foreign-investor registration and custody, trading or ownership constraints, semiconductor-sector concentration, market liquidity, and New Taiwan dollar exposure may shape eligibility. | Read guide |
Due-diligence questions before signing
- ◆Which assets are eligible today, and who may change their lending values?
- ◆Is the facility full recourse, limited recourse, or non-recourse in express terms?
- ◆What events trigger a margin call, and what is the cure period?
- ◆Can collateral be substituted, withdrawn, transferred, rehypothecated, or sold?
- ◆Who receives dividends, distributions, voting rights, and corporate-action choices?
- ◆What happens during a trading halt, suspension, delisting, or major issuer event?
- ◆Which currency and benchmark risks apply, and how can costs change?
- ◆What disclosure, dealing, tax, custody, and local-law advice is needed?
Sources and editorial note
The definitions and risk discussion were checked with private-sector educational material from UBS Singapore and J.P. Morgan Private Bank Asia-Pacific. Links are provided as citations only; no affiliation or endorsement is stated or implied.
Explore direct equity-backed capital
Squadron Capital deploys direct capital; it does not offer bank Lombard loans. Its non-recourse facilities require no personal or corporate guarantees. Learn how its commercial equity-backed financing differs from the educational loan categories discussed here.
View equity financingFrequently asked questions
What is a Lombard loan?
A Lombard loan is a credit facility collateralised by eligible financial assets, commonly a diversified portfolio of listed equities, bonds, or investment funds. The borrower keeps market exposure while accessing liquidity, but the provider can require more collateral or reduce the position if its value falls. Eligibility and legal structure vary by provider and jurisdiction.
Is Lombard credit the same as a stock loan?
Not always. Lombard credit commonly refers to portfolio-based bank lending across several eligible asset types. Stock loan is used inconsistently: it can mean cash financing collateralised by listed shares, or the separate market practice of lending securities to support settlement or short selling. The agreement, custody model, purpose, and recourse terms determine the substance.
Are Lombard loans non-recourse?
Not inherently. Many bank Lombard facilities are full-recourse obligations. Limited-recourse or non-recourse terms must be stated expressly in the documents; they should never be inferred from the Lombard label. Borrowers should review remedies, margin provisions, top-up duties, sale rights, and any personal or corporate guarantee.
What can trigger a margin call?
A decline in collateral value, a higher concentration charge, reduced eligibility, foreign-exchange movement, or a provider changing its lending value can create a shortfall. The facility documents specify whether the borrower must add assets, repay part of the balance, or face a sale of collateral, and how quickly action is required.
How is a Lombard loan different from margin lending?
Both use investment assets as collateral. Margin lending is commonly associated with a brokerage account and investment trading, while Lombard credit is often a private-bank liquidity facility evaluated across a portfolio. Product names overlap, so compare permitted use, custody, concentration policy, repricing, margin-call mechanics, and recourse rather than relying on the label.
Does Squadron Capital provide Lombard loans?
No. Squadron Capital deploys direct capital for equity-backed financing; it does not offer bank Lombard loans. Its commercial facilities are non-recourse, with no personal or corporate guarantees required. This page explains loan terminology for educational purposes and does not describe Squadron Capital’s facility as a loan.
Published by the Squadron Capital editorial and research team. Last reviewed: 23 September 2026.