How Lombard lending helps wealth management clients stay invested with flexible financing solutions

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HSBC is continuing to deliver digital innovation for clients in Hong Kong. It is one of the first banks globally to offer a fully digital Lombard lending solution through its mobile banking app.

“Our clients want an increasing range of wealth solutions made available via their mobile phone,” says Ryan Haugarth, head of self-directed trading, capital market platforms and wealth financing solutions, wealth and personal banking, at HSBC in Hong Kong. “Lombard lending was historically an offline service offered to private banking clients. By bringing it online, we are making this highly efficient form of financing available to a wider range of customers.”

Lombard lending, also known as wealth portfolio lending (WPL), is the practice under which banks provide loans to clients, backed by their investment portfolios. Because the loans are secured against a diversified portfolio of assets, they generally offer more attractive borrowing rates than unsecured lending, and better loan-to-value (LTV) ratios compared to traditional margin lending.

Wealthy individuals often use Lombard loans to bridge short-term liquidity gaps, or as longer-term financing solutions to strengthen portfolio returns. The current macro environment of rising interest rates, high inflation, geopolitical tensions and concerns about economic stability have produced a period of heightened asset price volatility. While the swings in markets may appear daunting, for some they create an opportunity to enter the market or build up portfolios at attractive price points.

However, the challenge for many private investors is that they lack the liquidity or buying power to take advantage of these opportunities, without cashing in some of their existing holdings.