What a Lombard loan from a Swiss private bank is
A Lombard loan is a credit line or fixed advance secured by securities, cash or precious metals deposited with the lending bank. In Geneva, Zurich and Lugano it is the standard credit product for wealthy clients domiciled abroad, because the collateral sits in the bank's own custody.
Why international clients use it
Clients abroad draw Lombard credit to bridge a property purchase at home, pay a tax bill without selling investments, fund a business opportunity or diversify currency exposure. The loan keeps the portfolio invested, so selling positions and triggering capital gains in the home country can be postponed.
Who it suits
It suits entrepreneurs, executives and families who already hold, or are prepared to transfer, a sizeable diversified portfolio to a Swiss bank. It does not suit borrowers seeking unsecured credit or anyone without liquid assets; Swiss private banks rarely lend to non-residents on income alone.
Relationship size and entry requirements
Private banks set minimum asset levels for opening a relationship, and these vary widely by institution, client country and service model. Expect full due diligence on the source of wealth, tax status and residence before any credit line is discussed, regardless of portfolio size.
Advance rates by type of collateral
The bank lends a percentage of each asset's market value, called the advance rate or loan-to-value. Percentages are internal, change with markets and differ between banks, so the table describes how collateral is usually ranked rather than quoting fixed figures.
| Collateral | Typical treatment | Main risk for the borrower |
|---|---|---|
| Cash and fiduciary deposits | Highest advance rate | Currency mismatch with the loan |
| Investment-grade bonds | High advance rate, lower for long maturities | Price falls when yields rise |
| Diversified equity portfolio or funds | Moderate advance rate | Market drawdown triggers margin call |
| Single stocks, small caps, structured products | Low, reduced or zero | Concentration and liquidity |
| Illiquid assets, private equity | Usually not accepted | Cannot be sold quickly |
Interest pricing and currencies
Rates are usually a reference rate plus a margin negotiated with the relationship manager. Swiss franc loans track SARON, euro loans a euro benchmark and dollar loans SOFR. The Swiss National Bank lowered its policy rate to 0 % in June 2025, keeping franc borrowing comparatively cheap.
Margin calls and forced sales
If the pledged portfolio falls in value or the loan currency appreciates, lending value can drop below the outstanding debt. The bank then asks for extra collateral or a repayment, and may sell assets without waiting if the client does not react within the agreed period.
Cross-border rules for clients abroad
A Swiss bank serving a client in Germany, France, the UK or the Gulf must respect that country's licensing and marketing rules. Some banks therefore serve certain countries only through regulated local subsidiaries, and may decline credit to residents of jurisdictions they do not cover.
Arranging a Lombard facility, step by step
Opening the relationship and pledging the portfolio are separate stages. The order below reflects what a client living abroad can expect; timelines depend mainly on compliance review and on how quickly assets can be transferred from another custodian.
- Shortlist banks that actively serve your country of residence.
- Prepare evidence of identity, residence, tax status and source of wealth.
- Open the account and transfer or buy the portfolio to be pledged.
- Request a credit proposal with advance rates for each asset class.
- Sign the pledge agreement and the credit agreement in a language you read.
- Agree the margin-call procedure and how you will be contacted.
- Review the facility at least yearly and after large market moves.
Using Lombard credit to buy Swiss property
A Lombard loan does not bypass the federal law on the acquisition of real estate by persons abroad, known as Lex Koller. A buyer living outside Switzerland still needs cantonal authorisation for most residential property, and holiday homes are subject to cantonal quotas, for example in Valais.
Mistakes and red flags
- Pledging a concentrated single-stock position and underestimating how fast its advance rate can be cut.
- Borrowing in Swiss francs against a euro portfolio without considering currency moves.
- Assuming the bank will wait before selling during a sharp market fall.
- Answering an unsolicited offer of a Swiss private-bank loan that requires a guarantee fee or insurance premium first; genuine banks deduct nothing before the client relationship and pledge exist.
- Ignoring how interest and pledged assets are taxed in your country of residence.
FAQ: Does Swiss consumer credit law apply to Lombard loans?
Generally not. The Swiss Consumer Credit Act excludes credit covered by collateral customary in banking or by sufficient assets of the borrower. Protection therefore rests on the contract, the bank's duties under the Financial Services Act and supervision by FINMA.
FAQ: Can the loan be drawn in euros or dollars?
Yes, most private banks offer multi-currency facilities and allow switching between currencies at rollover dates. Matching the loan currency to the asset or expense being financed reduces risk. Each switch can crystallise a currency gain or loss, so record the rates carefully.
FAQ: Is a Swiss Lombard facility reported to my tax office?
Switzerland exchanges financial account information automatically with partner countries under the OECD standard. Balances, income and account holders are reported to the country of residence. Lombard credit is not a confidentiality tool and should be declared wherever local law requires.
FAQ: How do I confirm that a Swiss bank is authorised?
Check the institution's name on FINMA's list of authorised banks and securities firms, and compare the address and domain with the bank's official website. Unauthorised entities often use names similar to established Geneva or Zurich houses to appear credible.
Before signing the pledge
Ask for the advance-rate schedule in writing, a worked example of a margin call, the full interest and fee grid, and the risk information the bank provides under FINSA. Comparing two banks on these documents reveals far more than headline interest margins.
Useful organisations and resources
- Lombard Odier – private clients — Geneva private bank presenting wealth management and credit services for international private clients and families.
- Rothschild & Co – Lombard lending risk information — Wealth-management document from Rothschild & Co Bank explaining how its Lombard loans work and their risks under FINSA.
- Société Générale Private Banking – Switzerland — Swiss private-banking arm of Société Générale describing services, including credit solutions, for clients booked in Switzerland.
Official and legal references
- Canton of Aargau – acquisition of residential property by persons abroad — Official cantonal information sheet on Lex Koller authorisation rules when persons abroad acquire residential property in Switzerland.
- Canton of Valais – conditions for holiday homes — Official Valais document setting out conditions under which persons abroad may acquire a holiday home in the canton.