Norman: Canada selected to host new multinational defence bank, sources say

Noah Note

Pippa Norman continues her win streak this week with another scoop, this time on the Defence, Security and Resilience Bank. The Globe and Mail is reporting that after a third round of negotiations, Canada has been selected to host the future bank.

As Pippa points out this is fairly ahead of expectations. I was expexting things to drag into the summer, though to collaborate on info I have also heard of this selection earlier this afternoon. I was going to wait for an official announcement, but it's getting out there fast now.

To recap for all the new folks… The DSRB envisions itself as a conduit delivering long-term, low-cost financing for defence and dual-use projects backed by the combined credit strength of member states and financial tools from private partners.

The bank will provide AAA-backed loans and guarantees not just to countries looking to finance new procurements, but also to companies looking to strengthen the Western Defence Industrial Base and supply chain.

The bank is owned by the collective member states that sign the charter. As a cost of signing, member states pay an immediate contribution (representing 20% of the bank's funding) to provide initial capital to the bank. This is supported by Callable Capital, which will be backed by the proposed AAA-rating the bank aims to secure through the ownership of its member states.

In theory, this allows member states and industry access to significant capital without having to take on the debt directly. It provides defence-specific financial support that doesn't contain the restrictions, while providing more long-term, diverse financing options.

The bank envisions itself as a global system accessible to NATO members, EU member states, and Indo-Pacific partners. It is not a NATO fund as some media portrays it. It is an open, collective financing instrument that, in theory, would allow anyone deemed eligible.

This is a major win for the Carney government, who have been heabily pushing the DSRB the last few months. It has been Canada championing the DSRB. It was Canada who has been putting in the effort to bring people to the table. It has been Canada who has put the financial and institutional resources into starting up the DSRB.

All Six of Canada’s major banks, National Bank, RBC, CIBC, Scotiabank, BMO and TD havw confirming their intent to support the new bank. Ontario, Montreal, and British Columbia have put out their bids in an attempt to swoon a potential choice of location for the new bank. I should note that I hear Toronto is currently the favorite, but don't quote me.

It has been one of the major soft-power exercises the feds have engaged in, and one they were hoping to pull people into. Reactions have been mixed, I should note. Partners like the UK and Germany have not been enthusiastic about the DSRB or it's potential, favouring their own domestic options and in the case of Germany EU programs like SAFE.

So to see the final roster of participants will be noted. Of course there has been no official announcement or confirmation. We have to wait for that, but I did want to prop up Pippa and her great work here.