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Switzerland

Securities Lending

Enness helps Swiss-based individuals to unlock the capital tied up in various types of security and stocks. From Lombard loans against listed stocks to pre-IPO loans, unlisted stock loans or a loan against a single line of stock, Enness will be able to help you secure finance.

Securities-backed lending can be used for a variety of purposes. From raising capital to solve a problem or pursue an opportunity, diversify assets or generate better ROI, Enness will build competitive finance packages for you, using your liquid assets.

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Lombard Loans For Swiss-based Borrowers

Securities-backed lending - also known as Lombard loans - refers to the mechanism of using stocks, shares and various other financial instruments as collateral for a loan.

Borrowers put forward equities, investment funds, bonds, and securities that are pledged to a lender. In return, the lender will offer a credit line using the securities as collateral. Securities-backed lending is usually a relatively short-term finance option, lasting from a few days up to around two years. The credit line extended by the lender can be used at any moment during the loan term.

Lombard loans are particularly advantageous because they allow you to access the capital you have tied up in your securities without having to resort to selling them to generate the liquidity you need. This type of lending is particularly quick, with the underwriting process moving much faster than other types of lending, allowing you to access funds in days or a couple of weeks. Lenders will focus on the key elements of the deal including the securities you will use as collateral, your exit and how affordable monthly repayments are, rather than many other aspects of your finances as is common in other types of lending, which is what makes the underwriting process so lean.

Types of Securities-backed Lending

There are various types of securities-backed loans available to Swiss-based borrowers. Where Lombard loans were traditionally offered exclusively against highly liquid listed stocks, today there is more choice, and you will find that there are more options to suit a variety of different collateral that can be put forward by borrowers.

Lombard Loans

Lombard lending (also known as securities-backed lending) is a short-term financing option that allows you to borrow funds from one week for up to around two years. Lombard loans against highly liquid listed stocks tend to be the most common type of securities-backed lending. Where most lenders can only offer this type of finance against securities on very large stock exchanges, Enness will be able to source and negotiate deals against securities on smaller exchanges, as well as offering solutions for various types of shares.

Shares, stocks and bonds are generally pledged as securities for Lombard loans, although in some cases, lenders will also consider lending against life insurance policies that have a surrender value.

Enness brokers high-value portfolio finance. Whatever you need finance for and however much you are looking to borrow, Enness will be able to create a competitive Lombard loan package for you.

Single Stock Loans

Like pre-IPO loans and unlisted stock loans, single stock loans are a relatively new product in the market and are not offered by every lender. Alternative and niche lenders moved to offer this type of finance when they saw the increasing number of individuals, families and entrepreneurs with very significant wealth tied up in one or two lines of stock.

Single stock loans are a niche part of the market, and the lenders that offer this type of finance tend to be niche players and specialists in the space. Single stock loans are an option for anyone who has built up significant wealth associated with single lines of stock. Provided that you have a logical reason for owning a significant amount of a single stock (rather than as the result of an unplanned investment strategy, for example), lenders will consider borrowers with different scenarios.

Pre-IPO Loans

As more companies offer significant equity to employees and investors before listing, pre-IPO loans are becoming increasingly sought-after. Often, a very considerable amount of capital is tied up in pre-IPO businesses either in Switzerland or abroad, often signifying a very significant amount of capital. For owners of pre-IPO stock, accessing this capital is often highly challenging. Selling this equity is complicated given stocks are in a privately-held business and there are often restrictive covenants. Usually, a sale won’t be advantageous to the borrower, who will usually stand to increase the value of their equity post IPO, if they can hold out until the company lists.

However, none of this helps if you own pre-IPO stock and need to access liquidity. With more and more pre-IPO companies content to wait for the ideal moment to list, there is also uncertainty for equity holders about when you will be able to access capital, as often the exact IPO timeline will be at least partially flux, based on markets and the economy. Enness has access to all the lenders that offer credit against pre-IPO stock and will negotiate attractive financing solutions for you.

Unlisted Stock Loans

Unlisted stock loans are a relative newcomer on the market. Lenders used to find it too complex to offer this kind of loan, but with the rise of very successful private businesses and family-owned companies, more lenders have looked to offer finance against unlisted stocks. Most commonly used by high-net-worth individuals and entrepreneurs, borrowers tend to seek out this type of finance when they have accrued a significant amount of capital or their net worth in the shares of a private business. Unlisted stock loans can be used for a variety of purposes, including accessing significant liquidity, reinvesting in the business in search of increased growth, returns or revenue and other investments, either on the stock market or into other ventures or opportunities.

What Can Lombard Loans Be Used For?

Swiss-based borrowers can use securities backed lending for a variety of purposes. Securities-backed lending is often used to create capital for significant purchases of investments. Buying a property (residential or investment real estate), diversifying a portfolio, creating liquidity to invest in a business or to pursue an opportunity or generate returns are all possibilities.

Lenders will always want to know about how you will deploy the loan and, where applicable, see a solid plan of action that they can get behind. Your exit - how you plan to repay the loan - will also be critical to securing the best deal. Lenders are relatively open to how you will exit (including using capital from things like a property sale, settlement of some kind, sale of a company, returns from a business venture), provided the plan is both feasible and the numbers add up.

High-value Securities-backed Lending

How much you will be able to borrow will depend on the securities you own, what you want the loan for, how much you are looking to borrow and for how long you want to borrow for.

Generally speaking, securities traded on larger stock exchanges are generally easier to borrow against than those on smaller exchanges and more lenders operate in the space. However, if you are based in Switzerland and your securities are listed on the SIX or on smaller stock exchanges, finding lenders who offer Lombard loans can be more challenging. While this type of finance is available (often through your trading platform or bank) often you will find you are not able to borrow a large amount, even if you have significant securities.

Enness is able to access the lenders that can cater to more complex cases and will often source a finance package even if you have been turned down by other lenders. With access to expert lenders, Enness is able to secure large loans, loans against illiquid stocks or against securities listed on smaller exchanges that are typically not served by mainstream lenders.

In return for pledging your shares with a lender, you will be able to borrow a sum against the value of your shares. Lenders need to be able to protect themselves against fluctuations in the value of the shares over the loan term, and so you will generally be able to borrow around 50% of the value of your shares. Securities-backed lending tends to be an option if you are looking to borrow a relatively high amount. Lenders have different conditions for lending, but many will only consider letting you borrow if you have a portfolio of CHF 100,000 or sometimes significantly more.

Enness has brokered very large securities-backed loans, including a finance package that allowed a client to borrow $150,000,000. Experts at the top of the market, Enness has the ability to negotiate very large Lombard loans for Swiss nationals and residents. Working with a variety of domestic and international lenders, Enness is able to access finance packages that are challenging to achieve yourself, and support you in borrowing as much as possible at the most competitive terms.

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Why Enness For Securities-backed Loans?

Enness is able to source finance from a variety of lenders. Many Swiss-based borrowers initially approach their domestic bank or trading platform to apply for a securities-backed loan, but many would-be borrowers encounter roadblocks. These lenders may not offer significant finance (sometimes capping lending at relatively low amounts) and the loan-to-ratio can be lower than you will find from specialist lenders.

Domestic lenders also tend to offer fixed packages, designed to cater to as much of the market as possible, rather than finance that meets the needs of an individual borrower. As a result, you may find that the portfolio finance packages offered by Swiss trading platforms or banks are inflexible or, in the worst-case scenario, you can’t access finance because your securities don’t meet the lender’s requirements. If you want to borrow a significant amount, have pre-IPO stock, unlisted stock or a single line of listed stock, finding a lender is likely to be a challenge. The players that operate in this part of the market are niche and while they can offer loans against Swiss securities or to Swiss residents, they may not be local players.

Enness will be able to source finance and negotiate with the lenders that can offer portfolio finance, no matter how complex your scenario. As well as securing competitive rates, your broker will also negotiate the best terms for you which meet your requirements and are structured in the most advantageous way.

Supporting you every step of the way and always acting in your best interests, Enness is able to broker very significant loans and negotiate loans that would be impossible to secure operating alone.

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Guide to Securities-Based Lending

Securities-based lending provides ready access to capital. From purchasing a property, buying assets, investing in stocks or growing a business, you can use securities-backed lending (also known as Lombard loans) for various purposes.

Securities-based lending can be an exceptionally useful tool for creating liquidity quickly. As well as more “traditional” Lombard loans against a diverse portfolio of liquid, listed securities, Enness can also broker more unusual deals. This includes sourcing and negotiating loans against unlisted  stocks, single stocks and pre-IPO loans.

Lenders in this space provide funding while using the securities available to a borrower. These loans are typically used to access liquidity quickly, allowing investors to take advantage of time-sensitive opportunities.

Building up a representative portfolio to gain access to this lending space change can be challenging. Enness has a proven track record in acting in clients’ best interests and negotiating the best outcome on their behalf.