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best bank for loan against stocks

UndividedNomad

UndividedNomad

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Nov 3, 2020
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#1
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Hi all,

Let's suppose you have fix-figures invested in diversified stocks (World ETFs). EU passport. what would be the best bank to get a loan against this portfolio?

To my knowledge:
-> brokers offer this via margin loans. IBKR only allows margin trading, but no margin loans for Europeans. LTV until 25-30% is realistic. Viable solution is DEGIRO but interest rate varies between 3% and 4%
-> take out a lombard loan. LTV much better at up to 70% but higher interest rates. CIM Banque in Switzerland offers this. looking for any other bank offering better conditions.

do you know any other alternatives?

thanks
 
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#2
The LTV will vary between banks and will depend on the quality and liquidity of your ETF and also importantly the loan currency. For example SC in Dubai offer 0% on Euro but LTV you need to work out with them as not sure they will accept ETF's. Reason being they get retro fees from Mutual Funds annual fees which offsets the lack of income from the loan itself.

See my post below:

https://www.offshorecorptalk.com/th...sdvantages-of-private-banks.34873/post-188519
P.S Lending rates for currencies in link have gone up except EURO so check the website for up to date information.
 
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#4
UndividedNomad said:
Hi all,

Let's suppose you have fix-figures invested in diversified stocks (World ETFs). EU passport. what would be the best bank to get a loan against this portfolio?

To my knowledge:
-> brokers offer this via margin loans. IBKR only allows margin trading, but no margin loans for Europeans. LTV until 25-30% is realistic. Viable solution is DEGIRO but interest rate varies between 3% and 4%
-> take out a lombard loan. LTV much better at up to 70% but higher interest rates. CIM Banque in Switzerland offers this. looking for any other bank offering better conditions.

do you know any other alternatives?

thanks
Click to expand...

Hey,

I might be able to get you such a loan from Pacific Private Bank.

Drop me an email to explore it further.
 
#6
Gediminas said:
Hey,

I might be able to get you such a loan from Pacific Private Bank.

Drop me an email to explore it further.
Click to expand...
Great, I will PM you.

JohnnyDoe said:
Any decent bank offers Lombard loans
Click to expand...
Great, if you can share any names of banks that can offer this this would be great. Also if you can share their terms. Ideally looking for at least 60% LTV with an investment line of credit (interest paid only on what is borrowed) sub 3% interest rate, with collateral backed by World ETFs. and can work with corporate accounts. thanks
Martin Everson said:
The LTV will vary between banks and will depend on the quality and liquidity of your ETF and also importantly the loan currency. For example SC in Dubai offer 0% on Euro but LTV you need to work out with them as not sure they will accept ETF's. Reason being they get retro fees from Mutual Funds annual fees which offsets the lack of income from the loan itself.

See my post below:

https://www.offshorecorptalk.com/th...sdvantages-of-private-banks.34873/post-188519
P.S Lending rates for currencies in link have gone up except EURO so check the website for up to date information.
Click to expand...
Thanks, I've checked it out, it is a good read.
 
#7
UndividedNomad said:
Great, if you can share any names of banks that can offer this this would be great. Also if you can share their terms. Ideally looking for at least 60% LTV with an investment line of credit (interest paid only on what is borrowed) sub 3% interest rate, with collateral backed by World ETFs. and can work with corporate accounts. thanks
Click to expand...
Coutts and CS do that, LTV was higher with index ETFs as collateral when I obtained the loans but really any bank should be able to offer this service.
 
#8
Writing a quick update on the search for a Lombard Loan. The additional difficulty I have is that the stocks I can offer to the bank as collateral are held via an Estonian company.

No Estonian banks will accept me and UK brokers I have contacted didn't find any banks willing to move forward.

I contacted all of the ones mentioned in this thread and more, and only Swissquote would offer me a lombard loan. 60% LTV, 3% interest rate on Euro. But they have huge fees (3x to 4x the commission IBKR charges on trades).

Does anyone know any bank not already mentioned in this thread that offers a lombard loan against a portfolio of World ETFs held via a company in Estonia? Would appreciate any help!
 
#9
UndividedNomad said:
Writing a quick update on the search for a Lombard Loan. The additional difficulty I have is that the stocks I can offer to the bank as collateral are held via an Estonian company.

No Estonian banks will accept me and UK brokers I have contacted didn't find any banks willing to move forward.

I contacted all of the ones mentioned in this thread and more, and only Swissquote would offer me a lombard loan. 60% LTV, 3% interest rate on Euro. But they have huge fees (3x to 4x the commission IBKR charges on trades).

Does anyone know any bank not already mentioned in this thread that offers a lombard loan against a portfolio of World ETFs held via a company in Estonia? Would appreciate any help!
Click to expand...
I can help you, but ltv max 35-50%, rates from 2% up to 3,75% max 10 years, big european bank.
 
#12
Martin Everson said:
The LTV will vary between banks and will depend on the quality and liquidity of your ETF and also importantly the loan currency. For example SC in Dubai offer 0% on Euro but LTV you need to work out with them as not sure they will accept ETF's. Reason being they get retro fees from Mutual Funds annual fees which offsets the lack of income from the loan itself.

See my post below:

https://www.offshorecorptalk.com/th...sdvantages-of-private-banks.34873/post-188519
P.S Lending rates for currencies in link have gone up except EURO so check the website for up to date information.
Click to expand...
What is SC?
 
#13
UndividedNomad said:
I've gone with Swissquote. They have slightly lower interest rates in CHF (3.6% vs 4.55% for EUR). Only downside is that they charge a safe custody fee of 0.025% per quarter for legal entities.
Click to expand...
Wise decision - we have a lot of clients doing the same with Swissquote but with a Dubai entity.
 
Last edited:
#14
UndividedNomad said:
Hi all,

Let's suppose you have fix-figures invested in diversified stocks (World ETFs). EU passport. what would be the best bank to get a loan against this portfolio?

To my knowledge:
-> brokers offer this via margin loans. IBKR only allows margin trading, but no margin loans for Europeans. LTV until 25-30% is realistic. Viable solution is DEGIRO but interest rate varies between 3% and 4%
-> take out a lombard loan. LTV much better at up to 70% but higher interest rates. CIM Banque in Switzerland offers this. looking for any other bank offering better conditions.

do you know any other alternatives?

thanks
Click to expand...
Interactive brokers has great interest rates for this and accepts most countries. Banks can give you high LTV though but with higher interest.
 
#16
Thought I would update this thread. Back in 2022, I had gone with the best option I found; a lombard loan from Swissquote. But the hikes in interest rates today make my loans quite expensive; USD at 8.33% and EUR at 6.91% (Lombard Loan: Flexible Financing | Swissquote). On top of custody fees of 0.025% per quarter.

My stock portfolio is made up of MSCI World ETFs in EUR and USD, right now valued 1.6M USD, held via an OU Estonian company.

I'm on the look out again for a cheaper financial institution that could help me. Or should i just accept that there are no free lunches? ...
 
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#17
UndividedNomad said:
I'm on the look out again for a cheaper financial institution that could help me. Or should i just accept that there are no free lunches? ...
Click to expand...

Yes just accept it.

All lends have a margin over base rate and right now base rates are high. The JPY carry trade would have worked out well for you seeing that JPY has weakened drastically against EUR and USD. If you had borrowed in JPY back then and converted to EUR or USD immediately you would be paying back much less today also.
 
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#19
UndividedNomad said:
Do you think that's achievable for a Lombard Loan or are these without SC's margin? There are quite good rates there (3% for EUR, 5% for USD)...
Click to expand...

You mean 3.83% and 5.39%. Yes that's very good rates actually in current market. Just trying to understand why they would lend i.e Euros at 17 basis points below the current ECB deposit rate of 4.00% which is a risk free return. These rates can't be what actually clients are getting unless they are offsetting it all with hidden fees.....hummm.
 
#20
Just to keep this thread alive - Swissquote, which I had gone with, now charges 6.91% interest rate for a EUR loan; that's more than 3 decimal point over the BCE rate + 0.1% custody fee.

So I started to look at other options.

Got quoted the following banks from a broker:
Bank A - 4.70% interest rate on EUR but 0.3% custody fee. no extra charges.
Bank B - 4.91% interest rate on EUR but 0.25% custody fee + 1200 eur a year for execution only account.
both use euribor 3m as base rate. the difference is their margin.

Does the custody fee appear to be within industry average?
I'm seeing custody fees in the 0.1%-0.2% online for most private banks. only problem is the portfolio is held by an Estonian company (legal entity).
 
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