Four major Canadian banks have now come forward to announce their support for a new multinational institution dedicated to financing defence projects, further signalling a marked shift in the way Canadian financial establishments view the previously shunned sector.
Scotiabank BNS-T, Canadian Imperial Bank of Commerce CM-T and National Bank NA-T have followed the lead of Royal Bank of Canada RY-T, becoming partner banks of the development group working to establish the Defence, Security and Resilience Bank (DSRB).
The Canadian institutions join JPMorgan Chase & Co. JPM-N, ING Group NV ING-N, Deutsche Bank AG DB-N, Commerzbank AG CRZBF and Landesbank Baden-Württemberg, partnering with the bank’s development group.
Scott Thomson, chief executive officer and president of Scotiabank, said in a press release, the bank’s decision was aligned with the investments Canada and its allies are making “to help build a safer and more secure world.”
“Scotiabank is committed to providing the capital, expertise, and strategic advice to strengthen Canada’s most critical sectors – including defence, security and resilience,” he said.
Similarly, Harry Culham, president and CEO of CIBC, said in a press release the bank was making this decision as “new opportunities emerge within the defence and security sectors.”
Canada officially endorses leadership role in new defence bank
National Bank confirmed its participation in an email to The Globe on Monday.
Carla Hindman, a spokesperson for Toronto-Dominion Bank, referred a question about whether the bank would consider supporting the DSRB to the Canadian Bankers Association, which represents more than 60 domestic and foreign banks operating in the country. Bank of Montreal did not respond to a request for comment.
Defence companies in Canada have long lamented the difficulties associated with receiving financing or investments in the country. Many Canadian financial institutions historically adopted strict environmental, social and government (ESG) standards that discouraged or prohibited investing in defence firms, contributing to a stigma around the sector.
The Canadian banks’ partnerships with the group working to establish the DSRB comes days after the federal government publicly endorsed the multilateral lending institution on Friday, when Ottawa hosted a virtual meeting of the 13 founding nations of the DSRB.
Isabelle Hudon, chief executive officer of the Business Development Bank of Canada, joined the meeting alongside Kevin Reed, president of the DSRB’s development group from Montreal.
Ms. Hudon, who has been appointed Canada’s chief negotiator, will represent the country in the months to come as discussions about the bank’s charter and headquarters location get under way.
She said Canada’s financial contribution to the bank could exceed $1-billion, but this is still being determined. Initial contributions made by NATO members will count toward their commitment to spend the equivalent of 5 per cent of GDP on defence.
In a press release Friday evening, the DSRB Development Group said it welcomed Canada’s confirmation of its leading role in establishing the bank, adding it’s “working closely with Canada and other like-minded nations” to determine the bank’s design, governance and operational framework.