Lombard loan as SoF

[fatcat]

Can and does a lombard loan (equities as collateral) serve as an adequate source of funds for a non-resident in a fucked up country like France or Italy, in the context of a property purchase.

Can you get away with not providing any financial context?

 

[AMD]

Can you get away with not providing any financial context?

nope it is not going to happen... move out of the country and find a better one, we have mentioned it a few times already. It's time to leave the EU.

 

[fatcat]

nope it is not going to happen... move out of the country and find a better one, we have mentioned it a few times already. It's time to leave the EU.

Could you please expand on the technicalities? Legally speaking, doesn't SoF get refreshed with the loan? Lets them check the regulatory boxes.

 

[Sols]

There is no legal definition of at which point a SOF check ends. The laws around AML and due diligence are intentionally vague, so as to never give respite to financial institutions. As a bank, you can dig down to the depths of hell in search for how a customer came to earn a 10 dollar bill, and still be found guilty of not doing enough for AML and fined by a regulatory/supervisory government body. Banks follow a risk-based approach whereby they assess the risk you pose and apply due diligence accordingly.

For the average retail customer, a loan is by itself a satisfactory SOF in most cases.

But if you are considered high risk, the bank might start digging into the lender (UBO, SOF, SOW of lender) and/or digging into how you came to own the collateral equities.

 

[cypriot]

Is lombard loan coming from a third country? If yes, in my case, i had to pay tax on bringing the amount of loan to the country to buy the property. It was not nice but still the almost 1% lombard rate was still better after taxes compared to the 4-5% mortgage.

 

[Martin Everson]

Can and does a lombard loan (equities as collateral) serve as an adequate source of funds for a non-resident in a fucked up country like France or Italy, in the context of a property purchase.

In principle yes. But they may still ask for information on how the collateral was generated in some cases where loan amount is very high.

Can you get away with not providing any financial context?

If they ask and you don't provide then no otherwise yes.

 

[fatcat]

Is lombard loan coming from a third country? If yes, in my case, i had to pay tax on bringing the amount of loan to the country to buy the property. It was not nice but still the almost 1% lombard rate was still better after taxes compared to the 4-5% mortgage.

What sort of tax? What country are we talking?

In principle yes. But they may still ask for information on how the collateral was generated in some cases where loan amount is very high.

And you'd say what's the cutoff point between a "high" amount and a "very high" one? Then, as a rule of thumb, two lombard loans (from different entities) is better than a single lombard loan, just because the amounts are smaller?

Banks follow a risk-based approach whereby they assess the risk you pose and apply due diligence accordingly.

Makes a lot of sense, thanks!

 

[JackAlabama]

Can and does a lombard loan (equities as collateral) serve as an adequate source of funds for a non-resident in a fucked up country like France or Italy, in the context of a property purchase.

Can you get away with not providing any financial context?

Well, they cannot really force you to provide anything as your cooperation in all these matters are voluntarily.
But then, if you chose to not play ball, they just will not do business with you.

 

[cypriot]

What sort of tax? What country are we talking?



And you'd say what's the cutoff point between a "high" amount and a "very high" one? Then, as a rule of thumb, two lombard loans (from different entities) is better than a single lombard loan, just because the amounts are smaller?



Makes a lot of sense, thanks!

Lombard loan from CH, paid tax in GR.

 

[fatcat]

Well, they cannot really force you to provide anything as your cooperation in all these matters are voluntarily.
But then, if you chose to not play ball, they just will not do business with you.

So as long as you have the lombard/margin loan agreement on your hands, and it's genuine, nobody can freeze your funds - they can merely refuse to have you as a client?

I understand that offshorecorptalk is all about a more holistic, complete approach. But if the above is true, it makes the lombard loan a great first-line defense moat for the rest of the setup.

Lombard loan from CH, paid tax in GR.

I was considering Greece myself. Did you buy as a non-resident? Did they ask you for any other information, pay slips, tax payments from back home, etc., or did the loan agreement alone suffice?

 

[JackAlabama]

So as long as you have the lombard/margin loan agreement on your hands, and it's genuine, nobody can freeze your funds - they can merely refuse to have you as a client?

I understand that offshorecorptalk is all about a more holistic, complete approach. But if the above is true, it makes the lombard loan a great first-line defense moat for the rest of the setup.



I was considering Greece myself. Did you buy as a non-resident? Did they ask you for any other information, pay slips, tax payments from back home, etc., or did the loan agreement alone suffice?

They can always freeze your funds no matter what you do and as soon as you bank you are at the mercy of the bank It became very clear this year with a broad range of examples that this can happen by just having certain nationality or by donation.

If the target bank is any good, they just reject the money and it is available where you sent it from.

So, make sure your documentation is good before you make a move.

 

[Martin Everson]

And you'd say what's the cutoff point between a "high" amount and a "very high" one? Then, as a rule of thumb, two lombard loans (from different entities) is better than a single lombard loan, just because the amounts are smaller?

Don't know what cutoffs could be is as depends on many factors. Any action you can take to lower the value of the loans will help. But i.e a 1m or even 500k Lombard Loan will still make compliance officer go regardless of what you do.