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Loan contract against the collateral of publicly traded securities

With margin loan all good investments can be made, even if there are no available funds on your account at the moment

  • You can take out a loan against the collateral of publicly traded securities across your entire portfolio.
  • Loan against the collateral of publicly traded securities can be used for purchasing and subscription of stocks.
  • The term of the loan is 1 month, and it is renewed automatically.
  • You can also repay a loan early.
  • There is no fee for taking out or repaying a loan; nor is there a contract fee.

Examples of using margin loan


Investor buys stocks worth 10 000 € by using 5 000 € of free cash and 5 000 € of margin loan.

Stock price increases by 10%
Position value11 000 €
- Outstanding margin loan, incl loan interest cost*5 035 €
= Position net value5 965 €
Profit/Loss965 €
Return+19,30%
Stock price decreases by 10%
Position value9 000 €
- Outstanding margin loan, incl loan interest cost*5 035 €
= Position net value3 965 €
Profit/Loss-1 035 €
Return-20,70%

*Presuming a loan period of 30 days with interest rate of 8.5%

Example:
Investor owns Apple shares worth 10 000 $ (market value) and wishes to purchase Facebook shares but lacks free cash.

Calculating the maximum potential Facebook purchase size by using margin loan:

Apple shares have a collateral rate of 50% meaning you can use up to 50% of the position’s market value for increasing your purchasing power for buying new shares.

Maximum loan for buying new shares using Apple shares as collateral5 000 $

Facebook shares also have a collateral rate of 50%, meaning 50% of the purchased position can be financed by using the same Facebook shares as collateral. The other 50% of the purchase has to be financed by existing purchasing power (free equity).

Existing purchasing power (loan against existing Apple shares)5 000 $
Margin loan using Facebook shares as collateral5 000 $
= Maximum available margin loan for purchasing Facebook shares (maximum amount of free equity divided by 50%)10,000 $
Total value of position after the purchase of Facebook shares20 000 $
Outstanding margin loan10 000 $

In current situation the margin loan is fully utilized, purchasing power (free equity) is 0 and net equity ratio is 50%. If the market value of position decreases a margin call (sale of collateral shares) might be executed by bank.

Please note that once the shares decrease in value the collateral value of positions also decreases (collateral value=market value of collateral assets*collateral rate). If collateral value drops below the outstanding margin loan, the bank may liquidate the positions (sell collateral assets) in order to guard against potential loan losses. A thorough explanation is given at Instructions concerning leveraged transactions.

Interest rates

LHV’s annual interest rates for loans and margin loans

EUR8,50%AUD12,00%HKD7,75%KRW10,25%
SEK9,25%USD7,50%CAD8,25%MXN14,50%
SGD8,5%CHF7,50%HUF13,25%NOK9,50%
CZK8,00%JPY7,25%NZD11,5%GBP7,75%
DKK8,25%INR20,25%PLN11,75%

Collateral rates

LHV’s collateral rates for loans and margin loans

Cash75%
Deposits75%
Fund
LHV Varahaldus60%
JPMorgan Asset Management60%
East Capital Asset Management60%
Swedbank Investeerimisfondid60%
SEB Varahaldus60%
SEB Fund Management S.A60%
Trigon Funds60%
Avaron Asset Management60%
London, Nasdaq, NYSE, AMEX
SPY, DIA, QQQQ, IVV, MDY, IWM, EFA, TDF, GLD, EWJ, EWZ, EPP, FXI, IEV, RSX, CEE, EWH, EWY, SLV, APB, EFA60%
> 5 USD50%
3—5 USD40%
GBTC40%
London
> 5 GBP50%
3—5 GBP40%
XETRA, OMX Helsinki
> 5 EUR50%
3—5 EUR40%
OMX Stockholm
> 40 SEK50%
20—40 SEK40%
COINETHE40%
COINXBE40%
COINXBT40%
Nasdaq Tallinn stock exchange
Arco Vara, ARC1T25%
Coop Pank, CPA1T60%
Ekspress Grupp, EEG1T50%
Enefit Green, EGR1T60%
Harju Elekter, HAE1T60%
Hepsor HPR1T50%
Merko Ehitus, MRK1T60%
Nordecon, NCN1T40%
PRFoods, PRF1T25%
Pro Kapital Grupp, PKG1T40%
Silvano Fashion Group, SFG1T0%
Nordic Fibreboard, SKN1T40%
Tallinna Sadam, TSM1T65%
Tallink Grupp, TAL1T65%
Tallinna Kaubamaja, TKM1T65%
Tallinna Vesi, TVEAT65%
Baltic Horizon Fund, NHCBHFFT50%
EfTEN Real Estate Fund III, EFT1T65%
Nasdaq Riga stock exchange
DelfinGroup DGR1R40%
Latvijas Gaze, GZE1R40%
SAF Tehnika, SAF1R45%
Nasdaq Vilnius stock exchange
Akola Group, AUG1L50%
Amber Grid, AMG1L50%
Apranga, APG1L65%
Grigeo, GRG1L60%
Ignitis Grupe, IGN1L65%
Invalda, IVL1L25%
INVL Baltic Farmland, INL1L25%
INVL Baltic Real Estate, INR1L25%
INVL Technology, INC1L25%
KN Energies, KNE1L50%
Litgrid, LGD1L50%
Novaturas, NTU1L50%
OMX Baltic Benchmark Fund, OAMOBBF1L50%
Panevezio Statybos Trestas, PTR1L25%
Pieno Zvaigzdes, PZV1L50%
Rokiskio Suris, RSU1L50%
Siauliu Bankas, SAB1L50%
Snaige, SNG1L25%
Telia Lietuva, TEL1L65%
Vilkyskiu Pienine, VLP1L50%
Vilniaus Baldai, VBL1L40%
Zemaitijos Pienas, ZMP1L50%
Warsaw Stock Exchange
ALLEGRO.EU SA, ALE50%
PGE SA, PGE50%
PKO BANK POLSKI SA, PKO50%
Powszechny Zakla, PZU50%
ORANGE POLSKA SA, OPL50%
PKN Orlen, PKN50%
JASTRZEBSKA SPOLKA WEGLOWA SA, JSW50%
BANK PEKAO SA, PEO50%
KGHM Polska Miedz S.A., KGH50%
CCC, CCC50%
Cyfrowy Polsat SA, CPS50%
CDPROJEKT, CDR50%
DINOPL, DNP50%
SANPL, SPL50%
MBANK SA, MBK50%
Kernel Holding SA, KER50%
Asseco Poland SA, ACP50%
LPP SA, LPP50%
Pepco Group NV, PEPCO50%
Copenhagen Stock Exchange
Novo Nordisk A/S, NOVOB50%
Vestas Wind Systems A/S, VWS50%
Ørsted A/S, ORSTED50%
Genmab A/S, GMAB50%
DSV Panalpina A/S, DSV50%
A.P. Møller - Mærsk A/S, MAERSKA50%
Danske Bank A/S, DANSKE50%
Coloplast A/S, COLOB50%
Pandora A/S, PNDORA50%
Ambu A/S, AMBUB50%
Novozymes A/S, NZYMB50%
GN Store Nord A/S, GN50%
ISS A/S, ISS50%
Tryg A/S, TRYG50%
Demant A/S, DEMANT50%
Bavarian Nordic A/S, BAVA50%
Royal UNIBREW A/S, RBREW50%
FLSmidth & Co. A/S, FLS50%
Netcompany Group A/S, NETC50%
Dampskibsselskabet Norden A/S, DNORD50%
NKT Holding A/S, NKT50%
Jyske Bank A/S, JYSK50%
Sydbank A/S, SYDB50%
Carlsberg B, CARLB50%
A.P. Møller - Mærsk B, MAERSKB50%
Rockwool Int. B, ROCKB50%
Oslo Stock Exchange
Equinor, EQNR50%
NEL, NEL50%
DNB, DNB50%
Mowi, MOWI50%
Telenor, TEL50%
Yara International, YAR50%
Aker BP, AKRBP50%
Norsk Hydro, NHY50%
Orkla, ORK50%
Tomra Systems, TOM50%
Storebrand, STB50%
SalMar, SALM50%
Scatec, SCATC50%
Gjensidige Forsikr, GJF50%
Schibsted ser. A, SCHA50%
Aker ASA, AKER50%
Frontline, FRO50%
Golden Ocean, GOGL50%
MPC Container, MPCC50%
Nordic Semiconductor, NOD50%
P/f Bakkafrost, BAKKA50%
REC Silicon, RECSI50%
Subsea 7, SUBC50%
Amsterdam Stock Exchange
ASML HOLDING, ASML50%
ING GROEP N.V., INGA50%
ADYEN, ADYEN50%
PROSUS, PRX50%
Koninklijke DSM NV, DSM50%
HEINEKEN, HEIA50%
JUST EAT TAKEAWAY, TKWY50%
AKZO NOBEL, AKZA50%
WOLTERS KLUWER, WKL50%
AEGON, AGN50%
NN GROUP, NN50%
ASM INTERNATIONAL, ASM50%
RANDSTAD NV, RAND50%
Eurocommercial Properties N.V., ECMPA50%
Unibail-Rodamco-Westfield, URW50%
ARCELORMITTAL SA, MT50%
BE SEMICONDUCTOR, BESI50%
RELX, REN50%
SHELL PLC, SHELL50%
SIGNIFY NV, LIGHT50%
Universal Music Group N.V., UMG50%
UNILEVER Plc, UNA50%

If in LHV’s assessment it is more appropriate to use a higher or lower collateral rate in the case of a share due to its risk level, LHV has the right to apply collateral rates that differ from those listed above. Before taking out a loan make sure to review the content of the product and the terms of its contract. Particular attention should be paid to the risks of borrowing. If needed, consult a financial adviser at LHV before taking out a loan. The interest and collateral rates of a loan depend on the interest rates of central banks.

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