Lombard lending – aka margin lending – enables users to obtain credit against portfolios of equities as collateral.

HSBC has launched what it says is a ground-breaking digital Lombard lending service – in which clients use equities as collateral against loans. It is aimed at affluent and high net worth clients using the Premier and Jade offerings in Hong Kong. 

The bank said the offering comes at a time when clients, anxious about high inflation, want to put cash to work more productively while remaining relatively liquid.

Eligible HSBC customers can activate a Wealth Portfolio Lending (WPL) facility online and use the credit line as soon as the next business day. Borrowers can use the HSBC HK Mobile Banking app to monitor collateral values, spend funds and manage their account’s margin status. Previously, customers could only apply for WPL at a branch and would wait weeks for manual processing, credit underwriting and facility setup. This process has now been fully automated.

Lombard lending is also known as margin lending. Because this type of margin lending is portfolio based. Clients holding diversified portfolios are able to achieve higher loan-to-value ratios while lowering the likelihood of margin calls triggered by price volatility, HSBC said in a statement. 

“To counter inflation, investors want their cash invested to generate returns, yet also want to stay liquid for emerging opportunities and other personal needs. Wealth Portfolio Lending solves this with on-demand buying power that can be deployed 24/7 through HSBC online and offline channels. Our clients have already activated credit lines worth several billions of dollars, which costs them nothing other than a low rate of interest on the days [when] they make use of the funds,” Ryan Haugarth, head of self-directed trading, Capital Market Platforms and Wealth Financing Solutions, Wealth and Personal Banking, HSBC, Hong Kong, said.

“Half of new facilities are being set up through our mobile app, which speaks to our clients’ appetite for digital wealth solutions and HSBC’s ability to bring digital innovation to market,” Haugarth said.