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.

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 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, PRF1T50%
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%
Grindeks, GRD1R50%
Latvijas Gaze, GZE1R40%
Olainfarm, OLF1R50%
SAF Tehnika, SAF1R45%
Valmieras stikla skiedra, VSS1R50%
Nasdaq Vilnius stock exchange
AUGA Group, AUG1L50%
Amber Grid, AMG1L50%
Apranga, APG1L65%
Energijos Skirstymo Operatorius, ESO1L50%
Grigeo, GRG1L60%
Ignitis Grupe, IGN1L65%
Invalda, IVL1L25%
INVL Baltic Farmland, INL1L25%
INVL Baltic Real Estate, INR1L25%
INVL Technology, INC1L25%
Klaipedos Nafta, KNF1L50%
Lietuvos energijos gamyba, LNR1L50%
Linas Agro Group, LNA1L50%
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
PGNIG, PGN50%
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%
GRUPA LOTOS SA, LTS50%
CCC, CCC50%
Cyfrowy Polsat SA, CPS50%
CDPROJEKT, CDR50%
DINOPL, DNP50%
SANPL, SPL50%
MBANK SA, MBK50%
Kernel Holding SA, KER50%
Asseco Poland SA, ACP50%
Gornictwo Naftowe, PGNIG50%
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%
Chr. Hansen Holding A/S, CHR50%
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, AKERBP50%
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%
Kahoot, KAHOT50%
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.