German industry groups urge Berlin to join defence bank initiative

By Marc Jones and Maria Martinez

BERLIN, Oct 29 (Reuters) - German business and industry associations on Thursday urged the government to join the Canada-led Defence, Security and Resilience Bank (DSRB), saying membership was needed to close financing gaps for companies in the defence sector and protect their access to future projects.

The joint statement was signed by groups including the German Security and Defence Industry Association (BDSV), aerospace association BDLI, the chamber of commerce DIHK, engineering association VDMA, savings banks group DSGV and the Startup Association.

The proposed multilateral institution, backed by Canada, seven other NATO countries and Ukraine, would provide long-term, low-cost financing for defence, security and resilience projects.

"The geostrategic threat situation urgently requires new answers and approaches: financing for the defence sector must be secured sustainably over the long term," said Elisabeth Hauschild, managing director of BDSV. 

The associations said the bank could offer guarantees for commercial loans to small and medium-sized companies, including startups, as well as long-term loans, venture capital and equity financing for capacity expansion, innovation and critical raw materials.

"As a multilateral development bank, it provides the decisive risk buffer through guarantees and long-term financing instruments—particularly where established banks have so far been reluctant to support long-term contracts for the Mittelstand," Hauschild said. 

The DSRB, which will be based in Canada, has faced challenges securing support from larger European nations. Reuters was first to report in September last year that Britain had declined to join the project.

A spokesperson for the German finance ministry told Reuters on Monday that Germany was an observer in the negotiations on DSRB's charter and was reviewing open questions.

Germany should participate in the bank's founding process and join the group of founding states as soon as possible, the business associations said.

The groups warned that companies from member countries could receive preferential access to procurement projects financed by the DSRB under its planned charter rules. If Germany stayed outside the institution, its companies could be excluded from market opportunities or face a competitive disadvantage against rivals from member states, they added.  

(Reporting by Marc Jones and Maria Martinez; Editing by Kirsten Donovan)