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What Is Securities-Backed Lending (Lombard Loans)?

How the wealthy borrow against their investment portfolios without selling, and the risks of doing so.

Last updated 9 August 2026 · 2 min read

Securities-backed lending, often called a Lombard loan, is borrowing money using your investment portfolio as collateral, without selling it. It lets the wealthy unlock liquidity from their holdings while staying invested and avoiding a taxable sale, in exchange for interest and the risk of a forced sale if markets fall.

One of the quiet advantages of significant wealth is the ability to borrow cheaply against it. Securities-backed lending, known in private banking as a Lombard loan, is the tool that makes it possible, and, used carelessly, one that can do real damage.

What it is

Securities-backed lending is borrowing money using your investment portfolio as collateral, without selling it. You pledge your stocks, bonds or funds to a lender, usually a private bank, and borrow against a percentage of their value (the loan-to-value ratio, higher for stable bonds, lower for volatile stocks). You keep the investments, and their income and upside, while accessing cash.

Why the wealthy use it

The appeal is liquidity without selling:

  • No taxable sale: selling appreciated assets can trigger capital-gains tax; borrowing against them defers it.
  • Stay invested: you keep your market exposure and any dividends or interest.
  • Speed and flexibility: a line of credit ready to draw for a property purchase, a business opportunity, a tax bill, or bridging finance.
  • Low cost: because the loan is well-collateralised, rates are typically low.

The risk: the margin call

The danger is the margin call. If the value of your pledged portfolio falls, the lender can demand more collateral or partial repayment. If you cannot provide it, the lender can sell your assets, at the worst possible moment, to protect itself. Leverage amplifies losses as well as gains, and if the loan carries a floating rate, rising interest rates increase the cost. A Lombard loan used modestly is a sensible cash-management tool; used aggressively, especially to buy more of the same volatile assets, it can turn a market fall into a forced liquidation.

The discipline

Sophisticated families treat securities-backed lending as liquidity management, not leverage for its own sake: modest loan-to-value ratios, a buffer against market falls, and a clear plan to repay. Governed that way, it lets a portfolio do two jobs at once, stay invested and provide cash. It is a natural companion to a well-run investment policy. See What Is an Investment Policy Statement?

Frequently asked questions

What is securities-backed lending?
Securities-backed lending, or a Lombard loan, is a loan secured against your portfolio of stocks, bonds or funds. You pledge the assets as collateral and borrow against a percentage of their value, keeping the investments (and their upside and income) while accessing cash. It is widely used by wealthy clients through private banks.
Why borrow against a portfolio instead of selling?
To get cash without selling. Selling investments can trigger capital-gains tax, take you out of the market, and unwind a carefully built portfolio. Borrowing against them provides liquidity while you stay invested and defer any tax. The wealthy use it for property purchases, business opportunities, tax bills or bridging needs.
What are the risks of a Lombard loan?
The main risk is a margin call. If the value of your pledged portfolio falls, the lender can demand more collateral or repayment, and if you cannot provide it, sell your assets at the worst possible time to cover the loan. Leverage amplifies losses, and floating interest rates can rise. It is powerful but can be dangerous if over-used.

This guide is educational and general in nature. It does not constitute investment, legal, tax or financial advice.