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Expat Portfolio Lending and Equity Stock Loans

Expat Portfolio Lending and Equity Stock Loans
Expat Portfolio Lending and Equity Stock Loans

Some lenders provide portfolio lending and equity stock loans of funding through various investment and loan structures against stocks and share portfolios. Releasing cash through a stock loan allows clients better liquidity by refinancing their publicly traded stocks and shares. The flexibility to gain access to the locked up value of their freely traded stock position can help clients a great deal if they need access to liquidity pretty quickly. A stock transaction program is designed specifically for companies, its employees, officers and major holders of publicly traded companies while providing total privacy between the client and the lender. The goal is to help clients obtain the best stock lending possible in today’s marketplace. Most clients never consider stock loans, share financing, or the unique proprietary forms of capitalization that will put liquidity in your pocket as they tend to revert to unsecured or secured financing against residential or investment property that they may hold, Our contact with portfolio and securities lending companies help you understand how your liquidity options work.

We collaborate with owners of publicly traded stock on the terms of each and every stock financing transaction. The process is quick, transparent and completely confidential. Financing proceeds can be used for personal or business purposes, or to diversify or hedge current stock positions. Funding is quick with a transaction closing in as little as 3 to 7 business days. Same day funding is also available. Financing is available from $500,000 to $50,000,000 USD.

Terms of stock funding are based on evaluation of the risk and future performance associated with the securities involved in the transaction. The term of the transaction is typically three years, with Interest payments or Maintenance Fees on quarterly or semi-annual bases. The financing and provision of liquidity are interest only, or accompanied by modest Maintenance Fees, and additionally, are non-recourse. The recipient of funding has the option of simply walking away at any time with no further liability and no personal or corporate guarantees. In the event of a default lenders do not report to any credit bureaus or governmental agencies. Neither is there any filing of any public notices. There is no adverse consequence to the client’s credit with securities financing.

There are a number of key advantages to an equity related stock loan

  • Fast transaction & funding
  • Non-recourse lending
  • No personal or Corporate guarantee.
  • No credit reporting in the event of a default
  • Private & confidential
  • Quick closing
  • Reduce the need for traditional bank recourse financing
  • No out-of-pocket expenses or up front fees
  • Low interest rates or Maintenance Fees
  • Fair share pricing using a three or five day average
  • Flexible terms
  • Large transaction amounts accepted

Stock Funding Process

  • Capital Recipient (or “client”) submits inquiry for funding by providing a stock symbol or stock code and target transaction amount.
  • Our lender determines the viability of the transaction, and calculates a maximum transaction amount, relative to the value of the stock and an interest rate, or Maintenance Fee, based on an assessment of both short and long term risks. Squadron issues a term sheet to client to review.
  • Terms are negotiated and finalized.
  • We send contract documents to client for review.
  • Final contract is negotiated and signed.
  • Both parties coordinate a delivery date with their respective brokerage.
  • Transaction is funded.

Stock Loan Questions

What is a non-recourse stock loan?

Non-recourse stock loan by definition is a loan against the value of a stock whereby the shareholder can borrow against a percentage of the stocks market value, at a low interest rate for the term of the loan. At maturity, the loan can be paid off in full or refinanced (provided no default has occurred) and the Borrower will receive back the same number of shares. Alternatively, if the stock price has fallen below the LTV amount, the borrower can simply walk away from the loan without any further consequences or recourse.

The loan to value ratio (LTV) varies depending on the intrinsic quality of the securities (stock). LTV’s are calculated based on evaluation of the potential risk and future performance associated with the stock. Generally the loan to value ration is 45% – 65%. Each loan’s LTV is evaluated on a case-by-case basis.

  • What types of securities (stocks) can be used?

Stocks must be freely traded securities. Loans cannot be processed for restricted stock.

  • How are the loans funded?

Most Loans are funded on a DVP (Delivery vs. Payment) basis, which varies from market to market. Both parties coordinate a delivery date with their respective brokerage firms or securities houses to fund the loan. The stock is transferred to the Lenders account simultaneously to the loan funds being transferred to the borrowers account.

  • What is the minimum liquidity required for a stock to qualify for a loan?

Liquidity is relative to the size of the block of stock.  Generally speaking the loan will be divided into several tranches, each tranche not to exceed 3-10 days average volume.

  • What are the costs involved with the loan programs?

There are no hidden costs such as application fees, appraisal fees, or any other upfront costs. In the event that a broker or middleman is involved any fees due can paid at the time of funding from the loan proceeds.

  • Are there minimum and maximum loan amounts?

The minimum loan amount is $500,000 USD the maximum is $100 Million USD.

  • How long does the loan process take to close?

Loans can close in 5-10 days depending on the speed at which the borrower processes the paperwork.

  • What are the interest charges and how are they paid?

Currently interest rates range from 4% – 12% depending on the liquidity and risk involved and are generally paid quarterly or semi-annually however other payment options are available.

  • Which markets / exchanges do you service?

We provide share financing and stock loans for all major global exchanges. If you do not see your country on our list please contact us for more information


Athens Stock Exchange

Australian Securities Exchange

Canadian National Stock Exchange

Toronto Stock Exchange

European Union EU
NYSE Euronext

Frankfurt Stock Exchange

Hong Kong
Hong Kong Stock Exchange

Indonesia Stock Exchange

Tokyo Stock Exchange

Bursa Malaysia

Philippine Stock Exchange

South Korea
Korea Exchange

Singapore Exchange

Stock Exchange of Thailand

The Borsa Istanbul

United Kingdom
London Stock Exchange

What Is Lombard Lending or Portfolio Lending?

In general, a lombard loan is a kind of loan that is backed by assets, which for the purpose of the loan are called “collateral”. The role of collateral is to protect the creditor from risk – if you fail to repay the loan, your bank may sell the assets to get the money back. This mechanism is similar to the way your house acts as a guarantee for your mortgage, but in case of the typical lombard loans provided to private banking clients, the assets used as collateral are mostly liquid assets such as stocks, bonds and other investments, often including life insurance plans.

Note that lombard lending is not limited to banks lending to their individual clients. Much greater volumes of lombard lending transactions flow among banks and other financial institutions on a daily basis. Thanks to its risk limiting advantages, asset backed lending is literally the lifeblood of the financial industry.

The name “lombard” has the same origin as Lombardy, the region in north Italy, whose people, the Lombards, were known as skilled bankers and lenders throughout the Medieval Europe.

Why Take Out a Lombard Loan?

When you need a bigger amount to spend or pursue an upcoming investing opportunity, a lombard loan can be a cost effective and flexible financing solution. Even when you have high liquid wealth, selling your existing investments to get the cash you need may not be the best option for various reasons (e.g. you may prefer to stay invested in anticipation of favorable market development, to continue to receive dividends, or for tax reasons). Instead of selling you can use the assets as collateral for the lombard loan.

Flexibility is one of the main benefits of lombard loans. Most banks offer them in all major currencies and across a range of maturities, typically from one week to 12 months. At maturity you can either repay the loan in full or roll it over (providing that you still have sufficient collateral).

Another key advantage is low cost. Because the risk is limited by the collateral, the bank can offer lower rates. This is again similar to mortgages, which also tend to have much lower rates compared to consumer loans and credit cards.

Lombard Loan Interest Rates and Costs

The interest rate typically consists of two portions:

The bank’s cost of financing for the particular currency and term, usually represented by an interbank interest rate such as LIBOR. Luckily at present most of the world’s major currencies, including the dollar, euro, pound and yen, have very low interest rates.
The bank’s margin, which is typically between 100 and 300 basis points (1 and 3 percentage points).
In addition to interest, commissions and other fees may apply in some cases. All the loan’s parameters, including the rate, flexibility of term, amount and fees, depend on the particular bank’s policy and the size and history of your business with them – the bigger and more important you are for your bank, the better they will treat you.

Limitations and Risks

While you don’t need to be a millionaire to have access to lombard lending facilities, minimum loan amounts apply ($100,000 is quite common, though far from a universal rule). The key prerequisite for taking out a lombard loan is having some assets eligible as collateral. Usually the market value of the assets needs to be higher than the loan amount, in order to provide a cushion for price fluctuations.

The key parameter that both you and your bank will be watching carefully is the loan-to-value ratio, or LTV. It is typically around 70% (you can borrow up to $70 for every $100 in assets), but can vary greatly, from as low as 15% to as high as 90%, depending on the bank, the customer, the maturity and the kind of assets (more volatile assets such as stocks require greater cushion and therefore lower LTV).

When taking out a lombard loan you should always keep the risks in mind, particularly when using the funds to buy additional investments. Leverage and flexible financing are a double edged sword and asset prices can go either way.

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UK Expat Pension Reviews specializes in Pension Transfers, UK expat pensions, Expat Life Insurance, Expat Mortgage Finance and Expat Savings and Investments. We offer comprehensive services tailored to the needs of expatriates. Our dedicated team provides expert guidance and assistance in evaluating and optimizing pension portfolios for UK expats worldwide. Whether you're looking to transfer your pension or seeking advice on maximizing your retirement savings, UK Expat Pension Reviews is committed to delivering personalized solutions and ensuring financial security for our clients.

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