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Unveiling the Historical Background of Lombard Lending

Updated: Apr 30

Did you know that Lombard lending has a rich historical background that dates back to the Middle Ages? This financial practice originated in Lombardy, Italy, where the Lombards, a Germanic people, established a banking system that was based on the pledge of collateral. The historical significance of Lombard lending cannot be overstated, as it laid the foundation for the secured lending practices that we see today.

During the Middle Ages, Lombardy was a hub of economic activity and trade which is where the Lombards developed their innovative banking system. The Lombards were known for their astute business acumen and their ability to assess the value of various assets. They recognised the importance of collateral in securing loans and devised a system that allowed borrowers to pledge their assets as security.

The concept of collateral, which is still a fundamental aspect of Lombard lending today, refers to the assets or property that a borrower offers as security for a loan. This collateral provides a guarantee to the lender that they will be able to recoup their funds in the event of default. In Lombardy, the Lombards accepted a wide range of assets as collateral, including precious metals, jewellery, land, and even livestock.

Fast forward to the present day, and Lombard lending continues to be a popular and attractive option for clients seeking flexible liquidity solutions. While traditionally limited to clients with substantial wealth, innovative financial institutions like Firenze are revolutionising the Lombard lending landscape by offering loans starting from £65k. This democratisation of Lombard lending allows a broader range of clients to access flexible liquidity solutions that were previously out of reach.

Firenze, with its streamlined processes and efficient decision-making, ensures that clients can access funds quickly and seamlessly, and provide a valuable service to their clients. Wealth managers and advisers who understand the advantages of Lombard lending can effectively incorporate this financial strategy into their offerings.

If you’re interested in joining the journey and accessing Lombard lending for your clients – get in touch!

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