UAE Private Banks See Surge in Lombard Loans as Clients Seek Liquidity Without Selling Investments

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UAE Private Banks see Surge in Lombard loans as clients seek liquidity without selling investments.

Lombard lending - credit secured against liquid investment portfolios - is growing rapidly among UAE private banks serving high-net-worth and ultra-high-net-worth clients.
Emirates NBD Private Banking offers Lombard facilities covering equities, bonds, deposits, precious metals and high-value life insurance premium financing.
First Abu Dhabi Bank (FAB) is pioneering tokenised real-world asset (RWA) collateral lending in a December 2024 partnership with Libre Capital.
HSBC UAE offers a revolving Lombard credit line against WorldTrader investment holdings, while specialist broker Enness notes widening collateral eligibility in the Dubai market.
UAE regulators - including the CBUAE and SCA - set strict risk frameworks for securities-backed lending, with mandatory margin floors and deleveraging triggers.
Advisors warn of a potential "double-whammy" risk if falling asset prices coincide with rising interest rates for leveraged borrowers.

CBUAE and SCA Oversight Underpins UAE's Growing Lombard Lending Market

Lombard lending has moved to the centre of private banking conversations across the Gulf. The Central Bank of the UAE (CBUAE) and the Securities and Commodities Authority (SCA) provide the regulatory framework for securities-backed finance, setting the standards for licensed institutions operating in this space. In this environment, loan-to-value (LTV) ratios, collateral eligibility and maintenance margin thresholds have become standard reference points for advisors, private banks and their clients alike.

The emergence of real-world asset (RWA) tokenised collateral - pioneered locally by First Abu Dhabi Bank (FAB) in partnership with Libre Capital - points to the next evolution of these structures. Meanwhile, the Abu Dhabi Global Market (ADGM) Private Credit Fund regime has expanded the institutional infrastructure available for sophisticated, cross-border lending secured on financial assets. Together, these developments are reshaping how UAE private banks compete for and serve their most affluent clients.

How Lombard Lending Works

Lombard lending provides credit secured against a liquid investment portfolio - such as listed equities, bonds, investment funds or cash deposits - without requiring the borrower to sell those assets. The bank sets a loan-to-value (LTV) ratio based on the risk and volatility of each asset class, determining how much can be borrowed relative to the portfolio's market value. Low-risk fixed-income holdings can support higher advance rates - sometimes up to around 95% of their value - while volatile equities attract more conservative caps, and unlisted or concentrated positions may be excluded entirely.

For high-net-worth (HNW) and ultra-high-net-worth (UHNW) clients, the appeal is clear: liquidity is unlocked without disturbing long-term investment positions, dividend flows or capital-gains timing. Proceeds can be deployed for property purchases, business investments, opportunistic market acquisitions or short-term cash-flow bridging - all while the underlying portfolio continues to perform.

Emirates NBD and HSBC Lead the Field

Emirates NBD Private Banking markets Lombard lending as a central element of its financing toolkit for individuals, families, investment companies, offshore trusts and holding companies. Clients can borrow against existing portfolios or combine their own equity with bank leverage to acquire new assets. The facility also extends to premium financing of high-value universal life insurance policies via the bank's Singapore office.

Emirates NBD integrates Lombard facilities with other capital markets products, including IPO financing and hedging through swaps and foreign-exchange forwards, making the private banking relationship a flexible funding platform for sophisticated clients. HSBC UAE similarly offers a Lombard credit facility, enabling clients to use WorldTrader investment holdings as collateral for a revolving US dollar credit line. A 67% advance ratio, for example, effectively allows borrowing up to roughly three times the eligible collateral value, subject to credit assessment and risk limits. Specialist finance broker Enness, operating in Dubai, notes that the range of eligible collateral has widened beyond highly liquid listed stocks to include unlisted and pre-IPO shares in certain cases, reflecting growing lender appetite in the market.

First Abu Dhabi Bank Pioneers Tokenised Collateral

First Abu Dhabi Bank, the UAE's largest bank by assets, is pushing the frontier of collateralised lending through its partnership with Libre Capital, formalised in December 2024. The memorandum of understanding aims to develop RWA collateralised lending - where tokenised fund units serve as collateral for credit facilities - using public blockchain networks to automate and streamline the process. The model focuses on net asset value (NAV) financing: accredited and institutional borrowers access credit backed by tokenised fund assets, with daily liquidity and automated risk-management mechanisms built into the structure.

FAB's Group Head of Global Markets, Sameh Al Qubaisi, described the initiative as a demonstration of the bank's commitment to driving innovation in the UAE's financial landscape. Automated processes are designed to ensure robust risk management and full regulatory compliance, in line with the UAE's broader goal of establishing itself as a global hub for financial and technological excellence.

Regulatory Architecture and Risk Controls

In the UAE, Lombard lending sits within a regulated framework overseen by the CBUAE and the SCA. Comparative legal analyses published by ICLG confirm that only licensed banks and finance companies can carry out lending on a habitual basis; unlicensed lenders face criminal sanctions, including fines and potential imprisonment. SCA margin-trading regulations offer a useful reference point for how UAE authorities approach securities-backed financing. Under those rules, initial margin must be at least 50% of the market value of securities traded on margin, while maintenance margin must not fall below 25% at any time.

The rules also cap margin funding to any single client at 10% of a broker's total margin-trading allocation, and require explicit contractual disclosure of the right to liquidate financed securities. While private-bank Lombard facilities operate under bilateral credit agreements rather than exchange-traded margin, they follow similar risk-management principles. The ADGM Private Credit Fund regime, introduced by the Financial Services Regulatory Authority (FSRA) in 2023, allows ADGM-domiciled funds to originate credit facilities secured on financial assets under tailored governance and investor-protection rules. This has encouraged more sophisticated cross-border Lombard structures for both onshore and offshore clients.

What Advisors Are Telling UAE Clients

Advisory materials increasingly flag the "double-whammy" risk of Lombard leverage in a higher-rate environment. If asset prices fall while interest rates remain elevated, borrowers may face margin calls just as the cost of maintaining the facility rises. Advisors typically recommend that clients stress-test scenarios in which markets decline sharply, property values soften and base rates stay high - all of which can erode both collateral value and financing viability simultaneously.

UAE-based HNW and UHNW clients often hold concentrated positions in regional equities, private businesses or real estate. For these clients, advisors generally recommend treating Lombard leverage as a complement to robust cash-flow planning, not a primary funding tool. Conservative LTV ratios, diversified collateral pools and clear exit or deleveraging plans are considered best practice when integrating portfolio-backed credit into a broader wealth strategy.

What Clients are Asking their Advisors

What is a Lombard loan and how does it work for private banking clients?

A Lombard loan is a credit facility secured against a liquid investment portfolio - such as equities, bonds or investment funds - rather than property or employment income. The bank sets a loan-to-value ratio based on the risk profile of each pledged asset, and the borrower retains ownership of those assets and their returns while drawing on the credit line as needed.

How do UAE banks calculate how much I can borrow against my investment portfolio?

Banks apply a loan-to-value (LTV) ratio that reflects the volatility and liquidity of each asset class. Low-risk securities such as bonds or cash deposits can attract advance rates of up to around 95%, while equities are subject to more conservative caps. Unlisted or concentrated positions may be excluded entirely or only partially recognised as eligible collateral.

Is using a Lombard loan to buy property in Dubai better than taking out a traditional mortgage?

The two structures serve different needs. A Lombard loan can be faster and more flexible - useful for clients wanting to preserve their investment strategy while seizing a time-sensitive property opportunity. Unlike a mortgage secured against the property itself, however, a Lombard facility is exposed to capital-market volatility, meaning a sharp portfolio fall could trigger a margin call and force asset sales at an inopportune time.

What are the main risks of a Lombard loan when markets are volatile?

The primary risk is that falling asset values breach the bank's maintenance LTV threshold, triggering a margin call that requires additional cash, new collateral, or forced asset sales. In a higher-rate environment this risk is compounded if borrowing costs rise at the same time as portfolio values decline - the so-called double-whammy scenario that advisors increasingly flag for UAE clients.