Ottawa Weighs Bid to Secure Headquarters of Proposed Multinational Defence Bank

A handful of institutions, including Royal Bank of Canada RY-T -1.39%decrease
, JPMorgan Chase & Co JPM-N -3.41%decrease
., ING Group NV ING-N -1.17%decrease
, Commerzbank AG and Landesbank Baden-Württemberg, have already signed on to help establish the DSRB.

The bank will be owned by its member countries, which will be asked to contribute in two ways: paid-in and callable capital. The former is an upfront contribution made when a country joins the bank, like a down payment. The latter is a promise to provide extra money if the bank is ever in a crisis – a factor that will help secure a AAA rating for the bank.

Any contributions made by NATO members should count toward their commitment to spend the equivalent of 5 per cent of GDP on defence.

Defence companies in Canada have come up against a wall of stigma in the past when seeking financing domestically, Mr. Reed told the industry committee. “Companies, just because they were in the defence category, were debanked,” he said, referring to the banking practice of terminating relations with a client based on perceived risk.

A lot of that stigma stems from environmental, social and governance standards that do not look favourably upon financial institutions lending to defence firms. This is changing, slowly, across banks, pension funds and insurance companies, Mr. Reed said, but there’s still a way to go before more credit and equity become available.

 

 

 

 

 

This  article was first reported by The Globe and Mail