SERVIZICredit Lombard

What is the Credit Lombard?

Lombard credit, also known as Credit Lombard, is a financial solution that allows investors to obtain liquidity without having to sell their investments. This form of credit is based on pledging easily liquidated assets in the market as collateral for the loan obtained. Assets, such as securities or investment funds, are offered to the bank as collateral, and in return, the investor receives a loan. The amount of credit provided depends on the bank’s assessment of the quality and value of the assets offered as collateral.

How does Credit Lombard works?

The way Lombard lending works is relatively simple. An investor who owns a portfolio of securities or other assets can offer these assets as collateral to the bank to obtain a loan. For example, if an investor wants to buy real estate but does not want to sell his or her investments, he or she can use Lombard credit.

In this way, the investor continues to retain ownership of the investments offered as collateral, enjoying their potential growth and dividends, while using the loan to finance the real estate purchase or other financial needs.

Benefits of Credit Lombard

IMMEDIATE LIQUIDITY

A major attraction of Lombard credit is the almost immediate availability of funds without having to liquidate existing investments.

ADVANTEGEOUS INTEREST RATES

Often, interest rates charged on Lombard loans are lower than other forms of financing, such as mortgages, due to the security provided by the assets.

FLEXIBILITY

Lombard credit offers considerable flexibility, allowing investors to access funds for a variety of purposes, including reinvestment, project implementation, or covering unexpected expenses.

RETENTION OF OWNERSHIP OF INVESTMENTS

Investors retain ownership of investments or financial assets pledged as collateral, allowing them to benefit from growth in value and dividends.

PRIVACY

It is not necessary to declare to the bank the specific use of funds borrowed through Lombard credit.

FAQ

Domande frequenti sul Credit Lombard
What are the types of financial instruments that can be used as collateral?

The types of financial instruments that can be used as collateral for a credit lombard are:

  • Equity securities
  • Bond securities
  • Mutual funds
  • Government securities
  • Real estate
How long does it take to obtain a credit lombard?

The time it takes to obtain a credit lombard varies by bank, but in general it is about 10 business days.

Is it possible to repay a credit lombard early?

Yes, it is possible to repay a credit lombard early. In this case, the bank may charge an early repayment fee.

Why is it called a Lombard loan?

Lombard loans are named after the Lombards, a people who conquered Italy in the 6th century AD and settled in the northern region that became known as Lombardy. The Lombards were known for their skill in commerce and banking, and they established the first banks in Italy.
Lombard loans are a type of secured loan, meaning that they are backed by collateral.

What are the benefits of Lombard loans?

Lombard loans offer a number of benefits, including:

  • Access to cash without selling assets: Lombard loans allow you to borrow against the value of your assets, such as stocks, bonds, or investment funds, without having to sell them. This can be a good option if you need cash quickly or if you want to maintain your ownership of your assets.
  • Flexible terms: Lombard loans typically have flexible terms, including loan amounts, interest rates, and repayment schedules. This can make them a good option for borrowers with a variety of needs.
  • Quick approval process: Lombard loans are often approved quickly, sometimes within hours or days. This can be helpful if you need cash quickly.
  • Tax advantages: In some jurisdictions, there may be tax advantages to using a Lombard loan rather than selling assets. For example, you may be able to defer capital gains tax by borrowing against your assets instead of selling them.

Overall, Lombard loans can be a good option for borrowers who need quick access to cash without having to sell their assets. They are also a good option for borrowers who want to maintain ownership of their assets and who need flexible loan terms.

What is the Lombard rate?

The Lombard rate is the interest rate charged by central banks when extending short-term loans to commercial banks. Traditionally, it refers to loans that are backed by specific collateral, such as government bonds or other securities.

What is the risk of Lombard lending credit?

Some risks associated with lombard credit exist, including:

  • Market risk: The value of the collateral may fluctuate due to market conditions. If the value of the collateral falls below the loan amount, the borrower may be required to provide additional collateral or repay part of the loan.
  • Liquidity risk: The lender may have difficulty selling the collateral if there is a sudden drop in the market or if the assets are not easily tradable.
  • Credit risk: There is always a risk that the borrower may not be able to repay the loan, even if the collateral is valuable.

In addition to these general risks, there are also some specific risks associated with Lombard credit, such as:

  • Operational Risk: The lender must have adequate systems and procedures in place to manage Lombard loans. This includes a clear understanding of collateral and its value, as well as the ability to monitor the loan and take corrective action if necessary.
  • Legal Risk: The lender must ensure that the loan agreement is enforceable and has a valid security interest in the collateral.

The Lombard loan can be a useful tool for those who need liquidity but do not want to sell their investments. However, it is important to be aware of the risks involved before taking out a Lombard loan.

Is a mortgage a Lombard loan?

No, a mortgage is not a Lombard loan.

A mortgage is a loan secured by real estate, such as a home or investment property. The borrower agrees to repay the loan over time, plus interest. If the borrower defaults on the loan, the lender may foreclose on the property and sell it to recoup their losses.

A Lombard loan, also known as a security-based loan, is a loan secured by marketable securities, such as stocks, bonds, and ETFs. The borrower agrees to repay the loan over time, plus interest. If the borrower defaults on the loan, the lender may sell the securities to recoup their losses.

Are Lombard loans regulated?

Yes, Lombard loans are regulated in Italy by the Testo Unico Bancario (TUB), which governs their characteristics and conditions of disbursement.
Specifically, the TUB requires that Lombard loans be granted in exchange for a pledge of liquid assets, such as stocks, bonds, or investment funds. The value of the pledge must be equal to or greater than the amount of the loan, and the bank has the right to sell the pledged assets if the borrower defaults.
The TUB also sets interest rates applicable to Lombard loans, which are generally higher than interest rates for personal loans or mortgages.
In addition, the TUB requires that Lombard loans be offered only to customers with a certain level of liquidity and creditworthiness.

How much does a Lombard loan cost?

The cost of a Lombard loan in Italy is determined by a number of factors.
To obtain a Lombard loan, you must submit a loan application to the bank, along with a security deposit as collateral. The bank will evaluate the application by disclosing all costs in advance.
The Lombard loan can be an attractive option for those who need immediate liquidity and have securities to use as collateral. However, it is important to consider the cost of the loan before signing a contract.

What are the benefits of Lombard lending?

Lombard lending offers a number of benefits, including:

  • Access to liquidity without selling assets. Lombard loans allow borrowers to access cash without having to sell their securities. This can be beneficial for borrowers who want to maintain their long-term investment positions or who are concerned about the market timing.
  • Competitive interest rates and terms. Lombard loans typically have competitive interest rates and terms, as they are backed by collateral. This can make them a more attractive option than other types of loans, such as personal loans or credit cards.
  • Lombard loans can be used for a variety of purposes, such as financing a business purchase, consolidating debt, or covering unexpected expenses. Borrowers can also choose to draw down on the loan as needed, providing them with flexibility in how they use the funds.
  • Speed and simplicity. Lombard loans can often be arranged quickly and easily, as they are based on the value of the borrower’s collateral. This can make them a good option for borrowers who need cash quickly.

In addition to these general benefits, Lombard lending can also offer a number of specific advantages to different types of borrowers. For example, Lombard loans can be used by businesses to finance working capital needs or to expand operations. Investors can use Lombard loans to finance new investments or to hedge their existing positions. And individuals can use Lombard loans to cover unexpected expenses or to consolidate debt.
Overall, Lombard lending offers a number of benefits to borrowers who are looking for a flexible and affordable way to access cash.

History of Lombard loans?

The name “Lombard” comes from a region in northern Italy called Lombardy. Banks in this region have a long history dating back to the Middle Ages and were famous for their loans with collateral. These loans were backed by assets provided by the borrowers as collateral.

Coming to modern times, Lombard loans still follow a similar principle.

Considerations

Despite its advantages, Lombard credit brings with it some important considerations. One of these is the risk borne by the applicant, since if the loan is not repaid, the bank has the right to sell the assets offered as collateral to recover the amount owed. In addition, the interest generated by the loan is a cost that the investor must consider. Another consideration is the need for the investor to own a portfolio of securities or other assets that can be offered as collateral.

Lombard credit is an attractive financial option for investors who need liquidity but do not wish to liquidate their investments.

However, as with any financial decision, it is essential to carefully weigh the associated risks and benefits, and it is advisable to consult a financial expert for a thorough understanding and informed advice.

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