Canada and eight international partners will sign an agreement on November 30 to establish the Defence, Security and Resilience Bank (DSRB), a new multilateral lender designed to finance defense production and strengthen supply chains.
Finance Minister François-Philippe Champagne said the signing would take place in Luxembourg. Canada will host the bank’s headquarters, with a European hub in Luxembourg. The founding partners are Albania, Belgium, Greece, Latvia, Luxembourg, Romania, Türkiye and Ukraine, and membership is open to other allies and close partners.
“In an increasingly uncertain and divided world, Canada is working to bring together like-minded partners to mobilize and deploy private capital in support of collective security,” Champagne said.
The DSRB will raise public and private capital to help governments and defense companies meet growing security needs, through sovereign lending, industrial expansion, critical supply chains and eligible procurement. It aims to achieve a AAA credit rating through strong financial backing from member countries, which it plans to use to lower borrowing costs, expand long-term financing and attract commercial investment.
Champagne said the bank would fill financing gaps for governments and defense companies, including small and medium-sized enterprises, and that its financing would be available to members of different sizes on equitable terms. The articles of agreement were negotiated in Montréal in the spring, following a joint declaration in July. The bank is expected to be fully operational in 2027.
The DSRB adds to Canada’s broader defense build-up. Ottawa said in March that it had reached NATO’s target of spending 2% of GDP on defense in the 2025-26 fiscal year. It has committed to the alliance’s new pledge of 5% of GDP by 2035, split between 3.5% for core military spending and 1.5% for wider security-related investment.
In February, the government launched Canada’s first Defence Industrial Strategy. It said the strategy positions Canadian industry to tap $180 billion in defense procurement and $290 billion in defense-related capital investment over the next decade, and aims to raise the share of defense contracts awarded to Canadian firms to 70%.
Cheaper financing for defense production will bring more Canadian manufacturers, logistics firms and technology companies into defense supply chains, many for the first time. Their insurance programs are unlikely to have been designed for that work.
Standard commercial property policies typically exclude war and may limit or exclude losses from terrorism, sabotage and civil unrest. Facilities that become part of defense supply chains could face a higher risk of deliberate attacks, including both physical sabotage and cyber attacks aimed at disrupting production. That makes standalone political violence and terrorism cover, and careful review of cyber policies for exclusions relating to state-backed attacks, more important.
Supply chain risks grow too. Defense production often relies on specialist components with few suppliers, so the failure of one supplier can halt a whole program. Contingent business interruption cover, and trade credit insurance for suppliers selling to defense contractors or foreign governments, can protect against those disruptions. Companies financed by multilateral or government-backed lenders may also find that lenders require minimum insurance as a condition of funding.
For brokers, the DSRB is a timely reason to review programs with manufacturing and technology clients that are considering defense contracts. Understanding the insurance requirements in defense contracts and lender covenants will be essential to keeping those clients as they grow into the sector.
