Insights on Lombard Lending

Navigating through crisis times

The current COVID-19 crisis triggered extreme volatility spikes in the financial markets. The Lombard lending business is particularly vulnerable to this volatility in the markets, due to the significantly increased number of critical credit positions within a short time. Processing these positions in a timely manner (i.e. margin call process) is a major challenge for this business in times of crises and can result in significant financial losses as well as reputational loss.

To be prepared and minimise losses during the current crisis and future crises, we recommend reviewing and optimising the Lombard lending monitoring process. By increasing automation and focusing on the efficient processing of critical credit positions, banks can improve profitability, especially during volatile times.

This paper addresses the following topics:

Lombard lending during times of crisis
Key challenges and solutions (including quick wins) in the area of people, process and technology
Example: Automation of the Lombard monitoring process