HSBC has introduced a digital Lombard lending service for its high-net-worth and ultra-high-net-worth clients in Hong Kong to support their wealth management needs.
Lombard lending offers customers a relatively low-cost option to borrow funds by using their investment assets as collateral. Annualized interest rate is HSBC’s HKD best lending rate minus 1.75%, with terms and conditions.
Because this type of margin lending is portfolio-based, clients holding diversified portfolios can achieve higher loan-to-value ratios while lowering the likelihood of margin calls triggered by price volatility, the bank says.
Eligible Premier and Jade customers can activate a wealth portfolio lending (WPL) facility online in minutes and use the credit line as soon as the next business day.
Borrowers can use the bank’s mobile banking app to monitor collateral values, spend funds and manage their account’s margin status 24/7. Previously, customers could only apply for a WPL facility at a branch and would wait weeks for manual processing, credit underwriting, and facility setup. This process has now been fully automated.
Ryan Haugarth, head of self-directed trading, capital market platforms and wealth financing solutions, wealth and personal banking, HSBC, Hong Kong, says: “To counter inflation, investors want their cash invested and generating 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 they make use of the funds. 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 adds.