ING and JP Morgan to support bank that will finance NATO defense industry

Five commercial lenders, including ING and JP Morgan, have pledged support for the Defense, Security and Resilience Bank (DSRB), which aims to boost military financing for NATO countries and their allies, Global Trade Review reported.

The bank itself was established earlier this year as a non-profit organization. It seeks to significantly increase financing for military buyers and suppliers through loans and bank guarantees.

The DSRB is in the early stages of development, but its initial balance sheet already stands at £100 billion. The institution already has the support of several shareholder countries.

ING recently emphasized that it will provide financial and technical support to DSRB, along with Commerzbank, JP Morgan, LBBW, and RBC Capital Markets, helping state shareholders raise financing.

Thus, commercial banks will help the DSRB access bond markets and attract investors. In addition, they will take on expertise in sovereign lending instruments and capital structuring, risk management and financial liabilities.

The Defense, Security, and Resilience Bank itself was created against the backdrop of Russia's full-scale invasion of Ukraine, as EU countries plan to increase weapons production.

The bank plans to issue AAA-rated bonds for participating countries to enable them to finance their own defense production and the purchase of weapons and equipment.

Importantly, AAA is the highest possible rating that can be assigned to a bank's bonds by any of the leading rating agencies.

Securities with an AAA rating have a high degree of creditworthiness, as their issuers can easily meet their financial obligations and have minimal risk of default. In other words, it is an indicator of high confidence in the bank.

It was previously reported that the Czech Ministry of Defense approved the purchase of the latest Leopard 2A8 battle tanks, and Czech manufacturers will produce such tanks themselves under license.