Lombard credit

Lombard loan is in banking the name for a short-to medium-term credit against the position of loan collateral in the form of a pledge of securities, cash or personal property. Even the pawn shop Pawnbrokers of one of the collateral loans.

History

The term collateral loan is derived from the northern Italian region of Lombardy, was awarded in the in the Middle Ages money in return for pledges. The first evidence can be found as early as the year 1400, as merchants loans to feudal lords and nobles awarded with deposit transfer, and thus contributed to the rise of Northern Italian trading houses. This form of credit was then initially popular in France, where in Paris Pawnshops established itself as a maison de lombard. Your form of business then spread all over Europe. As can be seen in the Netherlands in 1477, a pawnshop that " all have those pledges, get a ' Lombaerd ' " offering. In Germany the term Lombard is seen first mentioned in 1717.

Legal bases

The margin loan is a loan in accordance with § 488 BGB. Through this loan as collateral underlying pledging the bank shall direct or indirect owner of the pledged property ( § 1205 BGB) and takes the object in custody or let him keep ( § 1215 BGB). As handover spare the assignment or pledge of the claim ( § 1205 para 2 BGB) and the granting of co-ownership ( § 1206 BGB) are allowed. If the indirect transfer possession instead of passing, it is an indication to the direct holder is required ( § 1205 para 2 BGB). The borrower or guarantor remains the owner of the pledged property. The possession entitling the bank for recovery of pledged property if the borrower is in breach of its payment obligations under the credit agreement and the receivable is due ( § 1228 para 2 BGB). The use shall be made until a month after threat ( § 1234 para 2 BGB) and must be done freehand with a stock exchange or market price at objects, ie via the stock exchange or a broker ( § 1221 BGB).

Species

The term collateral loan a variety of credit types is described in which the pledging of assets as collateral is regularly in the foreground. The types are distinguished by the mortgage objects.

Lombard credit of Central Banks

Until the formation of the European Central Bank ( ECB) in June 1998, the national European central banks, such as the German Bundesbank, made ​​their affiliated banks in the context of monetary policy Lombard loans against collateral eligible securities lombard available. Thus, the banks are able to obtain needed liquidity. The borrowed securities must be owned by the banks ( vault A ). For the Bundesbank, the granting of a Lombard loan to the banks was limited to a period of three months. The interest rate at the margin loan was called lombard rate and was an important indicator of the money market.

With the transfer of responsibility for monetary policy to the ECB marginal lending facility has replaced the earlier Lombard loan in January 1999. The ECB is empowered under Article 18.1 ECB Statute, with the affiliated banks credit operations against " sufficient guarantees ", so-called eligible collateral complete. For eligible collateral since January 2007, a uniform framework ( the "Single List "), which includes marketable and non-marketable assets. Even with eligible collateral lending limits as a function of liquidity categories, maturities and interest rate types and variation margins are applied.

Effect Lombard credit

Under a securities lending against one understands the of a credit institution granted short-to medium-term loan against the pledge of marketable securities. It is used in the special form of securities of the credit facility to finance the purchase of securities. The loan amount depends on the lending limit of the pledged securities. Decreases the lending limit price gains under the existing loans obtained for the credit institutions Nachbesicherungsrechte from the GTC.

Goods Lombard credit

Commodities over which a tradition paper is issued may be financed as part of the goods Lombard loan. For this purpose, the transfer of the goods to the lending bank is not required, but the transfer indossierter tradition papers ( bill of lading, warehouse receipt or bill of lading ). This tradition papers represent the right to the goods, and a formally proper transmission of the papers at the same time means the transfer of a certificated herein merchandise. The merchandise margin loan is used to pre-finance the purchase or import of goods and will be repaid from the resale of these goods.

Exchange margin loan

As the exchange discount credit is no longer available, can be used as an alternative to the exchange margin loan. Business partners are according to § 19 paragraph 1 item. 3a Conditions Bundesbank but excluding credit institutions that can use this tool as part of its funding policy. The change must generally comply with the purchase conditions of domestic change the Bundesbank and up to 90 % of its nominal value are encumbered.

" Spurious " Lombard credit

Sometimes even the " fake" Lombard loan is mentioned in the economic literature. Distinguishing feature of the " real" collateral loan should be the only type of loan. The " fake" Lombard loan is therefore secured by a pledge of rights and / or personal property overdraft. The "real" Lombard credit is, however, therefore, placed on a special loan account. This account technical distinction has no legal or banking operations of importance and plays no role in banking practice.

Other types

• Noble Lombard credit
• Demand margin loan

Conditions

The margin loan is granted as a term loan with a maturity up to 2 years, may be viewed as total or in part and is repayable in one lump sum on the due date. The loan amount is determined by the lending limit of serving as collateral items. The imputed - and not market-related - interest rate at Lombard loan depends on whether and to what extent a credit institution must inferior own resources because of the pledged collateral. The lowest loan rate is therefore the basis for the pledge of bank deposits. The pledged goods can - except for the merchandise margin loan - the borrower / guarantor pledge conditionally no longer be used, but can not be sold.

Others

In securities lending, the situation is different. There is a fixed loan because the borrower as the borrower owners (and owners ), the securities and for the lender provides the agreed equivalent in money (or other securities ). Securities lending can pose hedged item for a margin loan of central banks, because the borrower will credit institution in the pledge of eligible securities may in turn obtain central bank money.

Derived from the Lombard loan is the verb "to hypothecate " the provision of pledges for the purpose of granting a Lombard loan.