The 'Buy, Borrow and Die' Wealth Strategy Has Become a $5 Trillion Market — WSJ

What happened

A Deloitte survey of 57 of the world's biggest private banks and other lenders finds that stock-based lending, also called Lombard loans in Europe and Asia, is a $5 trillion market and is increasingly available to people lower down the wealth scale.

Confirmed

Global impact / market context

This matters because lenders can book almost all fees as pure profit when losses on collateral, which means the stock pledged as security, are rare and can be sold quickly. More lending against stocks ties bank revenue to asset prices and lets wealthy clients spend without selling shares.

Analyst inference

The market has grown quickly as more global wealth pours into markets and asset prices rise, with Deloitte saying growth averaged 12% over the past 10 years. Because banks do not always disclose this lending, it is an opaque corner of finance.

Analyst inference

What to watch

1. Deloitte estimates around $5.4 trillion is extended in securities-based lending, mostly against stock and bond portfolios but also funds and crypto, and the figure has risen sharply. Confirmed
2. Watch whether more lenders extend these stock-backed loans to less wealthy borrowers, since Deloitte says the product was once mainly for wealth management clients rather than the masses. Proposed
3. Watch bank balance sheets for growth in this lending, because losses on pledged collateral are described as rare and most collateral can be sold quickly, which supports fee profit. Analyst inference

Evidence

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