Common defence, banks chosen for the multilateral project

The Defence Bank, the multilateral institution designed to mobilise investments in the armaments sector among European and NATO countries, takes a step forward and chooses the first core group of banks to accompany the activities of the DSR Bank, Defence, Security and Resilience Bank. Among the first institutions to accept the challenge are Commerzbank, ING Group, JPMorgan Chase, Landesbank Baden-Württemberg and RBC Capital Markets with the task of supporting the capital market activities of the new multilateral bank.

With an initial budget of £20 billion, the project has the support of European countries, the UK, Norway as well as Canada, Australia and Japan, and has received a new boost after the resolution passed by the European Parliament calling for its creation and the support of British Chancellor Rachel Reeves for the creation of the DSRB to help NATO and allied countries meet their commitment to allocate 5% of GDP to defence, as agreed at the NATO summit last June.

Europe and its allies must quickly rebuild defence capability, which means increasing armament production, securing supply chains and investing in infrastructure. Coordination of investments is needed to overcome the fragmentation of national procurement and avoid cost increases.

With governments grappling with ever tighter fiscal constraints, defence spending must avoid placing an unsustainable burden on public finances. The DSR Bank will operate through the issuance of AAA-rated bonds guaranteed by shareholder nations, making available affordable resources and long-term financing at the lowest possible rates, and supporting the defence supply chain by providing commercial banks with the risk to ensure liquidity and credit flows throughout the defence chain to enable companies to build and increase capacity.

The banks involved in this first core, to which others will be added shortly, will provide input on sovereign lending instruments, capital structuring, engaging investors to access debt capital markets, ensuring that the Defence, Security and Resilience Bank can attract and mobilise private capital.