Margin loan

Loan contract against the collateral of publicly traded securities

  • 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.
Discounted interest for LHV margin loan

There is a discounted interest rate of 4% EUR and 5% USD for LHV margin loan in the period 13.05-31.07

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 value11 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 interest rates for loans and margin loans

EUR8,50% 4,0%AUD12,00%HKD7,75%KRW10.25%SEK9,25%
USD7,50% 5,0%CAD8,25%HRK14,25%MXN14,50%SGD8.5%
CHF7,50%HUF13,25%NOK9,50%RUB20,00%
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
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%
OMX Tallinn
-----:
Arco Vara, ARC1T40%
Ekspress Grupp, EEG1T55%
Harju Elekter, HAE1T60%
Merko Ehitus, MRK1T60%
Nordecon, NCN1T50%
PRFoods, PRF1T55%
Pro Kapital Grupp, PKG1T40%
Silvano Fashion Group, SFG1T65%
Skano, SKN1T40%
Tallinna Sadam, TSM1T65%
Tallink Grupp, TAL1T65%
Tallinna Kaubamaja, TKM1T65%
Tallinna Vesi, TVEAT65%
Baltic Horizon Fund, NHCBHFFT50%
EfTEN Real Estate Fund III, EFT1T65%
OMX Riga
-----:
Grindeks, GRD1R55%
Latvijas Gaze, GZE1R40%
Olainfarm, OLF1R60%
SAF Tehnika, SAF1R45%
Valmieras stikla skiedra, VSS1R50%
OMX Vilnius
-----:
AUGA Group, AUG1L50%
Amber Grid, AMG1L60%
Apranga, APG1L65%
Energijos Skirstymo Operatorius, ESO1L50%
Grigeo, GRG1L60%
Invalda, IVL1L25%
INVL Baltic Farmland, INL1L25%
INVL Baltic Real Estate, INR1L25%
INVL Technology, INC1L25%
Klaipedos Nafta, KNF1L60%
Lietuvos energijos gamyba, LNR1L50%
Linas Agro Group, LNA1L55%
Litgrid, LGD1L50%
Novaturas, NTU1L50%
OMX Baltic Benchmark Fund, OAMOBBF1L50%
Panevezio Statybos Trestas, PTR1L50%
Pieno Zvaigzdes, PZV1L50%
Rokiskio Suris, RSU1L55%
Siauliu Bankas, SAB1L65%
Snaige, SNG1L25%
Telia Lietuva, TEL1L65%
Vilkyskiu Pienine, VLP1L50%
Vilniaus Baldai, VBL1L40%
Zemaitijos Pienas, ZMP1L50%
Warsaw Stock Exchange
-----:
Asseco Poland SA, ACP; PGE Polska Grupa Energetyczna, PGE; BRE, BRE; CEZ, CEZ; GTC, GTC; Getin Holding, GTN; KGHM, KGH; Pekao, PEO; PGNiG, PGN; PKN Orlen, PKN; PKO BP, PKO; PBG SA, PBG; PZU; TP SA, TPS; Lotos, LTS; Tauronpe, TPE; Bogdanka SA, LWB; Handlowy, BHW; Kernel Holding SA, KER50%
Copenhagen Stock Exchange
-----:
CARLB, VWS, DANSKE, NOVOB, TRYG, MAERSKB, DSV, DCO, NDA, DNORD, NKT, MAERSKA, WDH, JYSK, GEN, LUN, TOP, SYDB, NZYMB50%
Oslo Stock Exchange
-----:
SDRL, STL, YAR, ORK, TGS, SCH, MHG, TB, SUB, ACY, PGS, TEL, AKSO, DNO, NHY, DNBNOR, GOGL, PRS, NPRO, FRO, RCL, REC, SONG, FOE, SEVAN50%

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.