Lombard Loan?

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TrueTroop

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Apr 2, 2021
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Hey guys, does anyone here have experience with lombard loans?

Namely, I am looking for a lombard (or secured) loan with specific terms. I have a $500,000 USD securities portfolio, all blue chip, diversified NYSE securities that I can pledge as collateral. The broker is currently a major US broker but I am able to transfer the portfolio to a different custodian, if they are reputable and the terms of the loan agreement are what I am looking for.

There are lots of lombard loan providers out there, but to me, they all have the same 2 problems;

1) high interest rates because they are advertising these kind of loans as a short term solution, for USD I see rates currently at 8% APR

2) monthly interest payments required, again because they are mostly shorter term loans

Do you guys have any alternative solutions or providers you can recommend? I am essentially looking for a lombard loan at an annual interest rate of 1 or maximum 2%, and I can finesse the other loan agreement terms on my end to get a lower interest rate. For example, having only a small LTV ratio of 25% or having a longer term. I am looking for a long term solution, at least 12 months, potentially longer, and with yearly interest payments, not monthly.

Does something like this exist in the market at all? I've seen it described many times as possible, but never publicly advertised. Let me know and thanks in advance....
 
Amount is not a huge problem, if 7 figures was needed, the portfolio could be expanded to get such a loan. If it was 7 figures, any specific jurisdictions or banks you would recommend @JohnnyDoe ?
 
TrueTroop said:
TrueTroop said:
Amount is not a huge problem, if 7 figures was needed, the portfolio could be expanded to get such a loan. If it was 7 figures, any specific jurisdictions or banks you would recommend @JohnnyDoe ?
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Most private banks should be able to do this, in Switzerland I have experience with CS/UBS, EFG (not recommended) and Cité Gestion. I can introduce you to the latter if you wish (I don't earn any commission).

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I was looking at Switzerland, and the rates in CHF are lowest (12 months 1.6%), however for CHF only....For USD 12 months it's 5% in Switzerland.

I mean, I could take the CHF, take on the market movement risk, but I would prefer a low interest rate on USD directly because that is what my portfolio is based in...

But given the US central bank interest rates, would it even possible to get even a secured loan with less than 5% interest? My brain is saying yes but based on what I'm seeing in terms of current market offering's I'm not sure it is possible to get it under 5.....
 
What about any private banks that would provide a lombard loan with straight BTC as collateral? Would that be possible from a swiss bank for example?
 
JohnnyDoe said:
JohnnyDoe said:
It's a very bad idea to give your btc to a bank, and anyway the rate would be quite high.
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Not your keys....I get it, but I'd feel comfortable doing so to a reputable and well regulated Swiss bank. The question is....Why would the rate be higher? If I will be doing a low LTV like 25%, the type of collateral (crypto or stock) I think becomes less important....

BeyondBorders said:
BeyondBorders said:
Unlikely to see any bank accept Crypto as Collateral. Nexo.com could be your solution.
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This company? No thank you....

https://www.euronews.com/next/2023/...er-raid-at-crypto-lenders-offices-in-bulgaria
 
Ok yah, too high interest rates.....I'll have to stick to more traditional collateral it seems.
 
daniels27 said:
daniels27 said:
But who would give you USD at 2% if even the basic saving account gives 5% and is FDIC insured?
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Nobody, save for some private bank charging 10%+ for some other product at the same time.
daniels27 said:
daniels27 said:
What this question for free lunch here?
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No free lunches.
Corollary: when you want something for nothing, you get nothing for something.

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daniels27 said:
daniels27 said:
But who would give you USD at 2% if even the basic saving account gives 5% and is FDIC insured? What this question for free lunch here?
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This was common practice, but I guess 12-24 months ago....Now it seems like even secured loans under 5% in USD are not possible....

However, you can find under 2% secured loans right now in the market, look at them in CHF or in JPY. Recently got offered 1.6% for 12 months, in CHF, but yes, requires bigger portfolio and wealth management services, likely cannot be a standalone loan.

Even using BTC as collateral, I found a Swiss option for under 6%....
 
TrueTroop said:
TrueTroop said:
I was looking at Switzerland, and the rates in CHF are lowest (12 months 1.6%), however for CHF only....For USD 12 months it's 5% in Switzerland.

I mean, I could take the CHF, take on the market movement risk, but I would prefer a low interest rate on USD directly because that is what my portfolio is based in...

But given the US central bank interest rates, would it even possible to get even a secured loan with less than 5% interest? My brain is saying yes but based on what I'm seeing in terms of current market offering's I'm not sure it is possible to get it under 5.....
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How can your brain say yes to this when the *risk free* fed fund rate is over 5%? It might be possible in a years time or so if they start to cut aggressively and maybe go back to 1.5% (would not bank on this too much tho).

Also the next point, chf has a much much lower interest structure than usd. So no wonder you find all these "low" interest rates 😉, but keep in mind fx which can greatly impact you (ask the polish how much chf loans are a great tool).

Leading to the next question of how did you manage to amass that portfolio with your general understanding of finance?
Best advice, forget taking any kind of leverage if you want to keep your 500k.
 
Amandograde said:
Amandograde said:
How can your brain say yes to this when the *risk free* fed fund rate is over 5%? It might be possible in a years time or so if they start to cut aggressively and maybe go back to 1.5% (would not bank on this too much tho).

Also the next point, chf has a much much lower interest structure than usd. So no wonder you find all these "low" interest rates 😉, but keep in mind fx which can greatly impact you (ask the polish how much chf loans are a great tool).

Leading to the next question of how did you manage to amass that portfolio with your general understanding of finance?
Best advice, forget taking any kind of leverage if you want to keep your 500k.
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Most entrepreneurs don't know a lot about how to invest their money. They just know about making businesses and money.
 
Jbb1 said:
Jbb1 said:
Most entrepreneurs don't know a lot about how to invest their money. They just know about making businesses and money.
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Yah. Then keeping away from all leverage impacting ones portfolio under any cost is by far the best choice.
Toughen out the drawdowns is hard enough, adding leverage to the mix can be deadly.
 
TrueTroop said:
TrueTroop said:
Not your keys....I get it, but I'd feel comfortable doing so to a reputable and well regulated Swiss bank. The question is....Why would the rate be higher? If I will be doing a low LTV like 25%, the type of collateral (crypto or stock) I think becomes less important....



This company? No thank you....

https://www.euronews.com/next/2023/...er-raid-at-crypto-lenders-offices-in-bulgaria
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That was FUD and hoax. They sued for diffamation if I remember correctly.
 
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