Canada to host multinational defence bank

Canada has been selected to host a new multinational defence bank, which will provide “long-term, low-cost financing for defence, security, and resilience initiatives across supply chains,” the federal government has announced.

The decision came after multinational negotiations concluded in Montreal on Wednesday, the Department of Finance said in a release.

The so-called Defence, Security and Resilience Bank (DSRB) will provide financing for defence, security and infrastructure projects to NATO members and their allies. Once it’s established, governments will be able to access financing and procurement support while private funding is protected by a credit guarantee program.

Earlier this year, all of Canada’s Big Six banks signed on to join the DSRB. Major global banks including JPMorgan, Deutsche Bank, Commerzbank and ING Group also support the creation of the new bank.

Commercial banks will lend to defence firms at lower interest rates than they might otherwise charge because the loans would be backed by defence bank guarantees. These low-interest loans to national governments will ease borrowing costs while increasing private investment in industrial capacity for weapons and infrastructure.

It’s not yet clear which Canadian city will host the DSRB. Vancouver, Toronto, Ottawa and Montreal are among the cities campaigning to host the bank’s headquarters and the estimated 3,500 jobs it would bring.

Jonathan Got

Jonathan Got is a reporter with Advisor.ca and its sister publication, Investment Executive. Reach him at jonathan@newcom.ca.