Polish banks seek state risk-sharing to fund defence build-up

By Marta Maciag

SOPOT, Oct 15 (Reuters) - The Polish Bank Association, which represents most of the country’s lenders, is in talks with public institutions to share the risk of financing defence projects, its vice president Agnieszka Wachnicka said on Thursday.

Poland has secured €43.7 billion ($49.0 billion) in European SAFE loans targeting the domestic defence industry. It is expected to spend around €53 billion on defence in 2026, the fourth-highest in the European Union behind France, Italy and Germany, NATO data shows.

• Military technology can become outdated faster than the loans financing it, Wachnicka told Reuters, citing drones as an example

• Regulatory limits on banks' exposure to single sectors and regions can also prevent them from taking on more defence projects, Wachnicka said

• "SAFE is a big help here ... but it is still not enough," she added

• Bank Handlowy, Citigroup’s Polish unit, has granted significant guarantee lines to defence firms, CEO Elzbieta Czetwertynska said

• Czetwertynska said dual-use technology is becoming more important, as private companies look for ways to make large defence investments pay off if demand falls

($1 = 0.8924 euros)

(Writing by Rafal Nowak, editing by Milla Nissi-Prussak)