NATO Nations to Establish International Bank to Finance Defense Procurement

NATO countries will create an international defense bank, the Bank for Defense, Security and Resilience, which will specialize in lending for defense procurement by NATO and partner countries.

This is reported by the Europäische Sicherheit & Technik.

Relying on political contributions and support from transatlantic financial institutions and industry, the DSRB Development Group is establishing an international non-profit bank to finance defense procurement. This international financial institution aims to help NATO Allies and partner countries meet the goal agreed at the NATO Summit in June 2025 of spending 5 percent of GDP on defense.

In July, a high-level working group chaired by Chancellor of the Exchequer Rachel Reeves and Defense Secretary John Healey endorsed the creation of the DSRB. The European Parliament also supported this initiative and called on member states to establish the bank. The new institution will be owned by the states and will be called the “Defense, Security and Resilience Bank” (DSRB).

In addition to the founding states, five large financial institutions that make up a significant part of the transatlantic financial system also supported the creation of the bank:

• Commerzbank: a large commercial German bank
• ING Group: a Dutch multinational financial and banking giant
• JP Morgan Chase: a US-based investment banking and financial services giant
• Landesbank Baden-Württemberg: German regional state bank
• RBC Capital Markets: the investment banking arm of the Royal Bank of Canada (RBC)

The participation of these banks means that the DSRB can “launch with the technical credibility and market trust necessary to operate at scale.” All five institutional sponsors will provide “expertise in sovereign lending instruments, capital structuring, investor attraction, rating advice, risk and asset-liability management, and access to the debt capital market,” ING Group said in a press release.

DSRB plans to announce other “banking partners, global investment firms and sovereign stakeholders” in the coming weeks. Formal design of the bank’s structure will begin in early September.

Why is this necessary and how will it work?

The banking system of “Western” countries traditionally perceives arms manufacturers as high-risk clients or those that do not meet environmental, social, ethical and governance standards.

“Many defense companies have problems with simple things like opening a bank account,” explains Florian Seibel, co-founder of Quantum Systems.

According to him, deals are blocked due to internal banking regulations that do not meet current political challenges. The experience of startups shows that the approach of banks in key European markets is not consistent with the current needs of the defense sector.

In particular, all UK banks use ESG (Environmental, Social, and Corporate Governance) investment standards, which often results in all defense investments being labeled “unethical.”

According to a press release from the DSRB group, the new bank will pool the creditworthiness of the member countries to raise funds on global financial markets. This collective debt will give countries access to the cheapest possible financing (AAA credit rating) for long-term, predictable and reliable defense procurement.

The funds raised will allow countries to purchase weapons, modernize defense systems and invest in dual-use technologies without significantly increasing their direct public debt. These funds will complement existing defense budgets. At the same time, any national contributions to the bank will support the goals of the defense investment policy, including NATO’s GDP target for defense spending.

The bank will help guarantee risks for commercial banks by encouraging them to lend to companies operating in the defense supply chain. This will solve the problem of the credit crunch by providing liquidity to all levels of the supply chain.

In addition, the creation of a specialized bank will attract capital from private investors, including pension funds and other private institutions, which could co-invest or provide additional guarantees backed by government tax incentives.