The Bankers are Getting Behind Canada's Defence Mobilization

For those of us who pay close attention to defence policy, the drumbeat of announcements from Canada’s Big 5 banks was a big deal:

• TD announced $150 billion in lending over 5 years to support investment in critical Canadian projects, including defence
• RBCx announced a $1.4 billion growth fund that will invest in dual-use defence frontier technologies
• BMO announced a $70 billion commitment over 10 years, to support critical economic sectors including defence and security
• CIBC put it right in the headline: “CIBC commits $2 billion to help Canadian defence and dual-use businesses grow”
• Scotiabank announced a $100 billion commitment to help Canadian companies grow, and CEO Scott Thompson told the Globe and Mail that would include defence companies. Scotiabank also announced new defence bonds last week.

This is a remarkable change for how Canada’s big banks do business. Historically Canadian banks avoided financing military companies altogether. Now, they are all talking about how they’re pitching in to support Canada’s rearmament.

Earlier this year all of the Big Six banks (including National Bank) committed to back the proposed Defence, Security and Resilience Bank to be hosted in Canada.

Here’s why this matters: Canada is dramatically ramping up defence spending, and the government’s Defence Industrial Strategy sets out ambitious targets for a network of homegrown defence suppliers — so that we’re not just growing our arsenal of weapons and military equipment, we’re also growing our economy.

But federal government procurement dollars alone won’t get us there. The signals that we’re now seeing about major institutional investors stepping up to support Canadian defence capacity is important.

In fact, the defence sector was everywhere at Prime Minister Mark Carney’s landmark Canada Investment Summit this week. At the Summit, BDC detailed how it will deploy $1 billion under its existing $6 billion Defence Platform. 

And the Summit Prospectus, pitched to global investors, includes several defence projects, including accelerants for artillery and rockets, turbojets for drones, and night-vision technology. 

When it comes to defence policy, it’s easy to focus on kit and the capabilities. But experts know that industrial supply capacity wins wars, and deploying capital is a key part of that story.

The boardroom and the portfolio manager’s office can feel like a long way from the tip of the spear, but this week we saw clear evidence of the bankers and fund managers supporting Canada’s national defence project.