(Bloomberg) — Europe’s top banks have convened a task force to boost the industry’s capacity to support a step change in the region’s defense spending.
Banks including BNP Paribas SA, UniCredit SpA, Intesa Sanpaolo SpA, ING Groep NV, Deutsche Bank AG and Cooperatieve Rabobank UA have signed up to a task force on defense financing set up by the European Banking Federation in recent days, the EBF told Bloomberg News.
Other countries including Germany, Spain, Belgium and Poland are represented in the task force through their national banking lobbies, as are EBF specialists.
“A broad segment of our membership is involved, as this has become a topical issue in most, if not all, member states,” said the EBF’s deputy chief executive, Sebastien de Brouwer, on the same day that finance ministers meeting in Warsaw threw their weight behind Europe’s decision to ramp up defense spending. The topic will be discussed in more detail on Saturday.
The banks’ task force is exploring what regulatory issues, if any, prevent lenders from backing defense projects and companies and how those can be addressed. It will also coordinate how the finance industry communicates around its defense activities, and explore the possibility of “incentives” to encourage greater levels of activity. The objective is to ease the way for banks to support Europe’s higher defense spending.
“We are very pleased to be joining the task force. Deutsche Bank is strongly committed to supporting the growth of the European defense sector,” the German bank told Bloomberg.
Many of Europe’s banks have traditionally been reluctant to lend to companies engaged in defense-related activities, but several regulators told Bloomberg the restrictions mostly related to the banks’ own environmental, social and governance policies rather than rules.
Banks see the current financing push by European states as helpful, because it reduces the reputational risk of lending to arms manufacturers and others involved in the defense industry.
–With assistance from Jorge Valero.
(Updates to add Deutsche Bank in second, sixth paragraphs.)
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