The Canadian Imperial Bank of Commerce (CIBC) has pledged $2 billion to finance domestic small and medium-sized businesses (SMBs) building in defence.
The news: CIBC announced the commitment on Thursday. The Toronto-based bank said the funding will be targeted towards Canadian defence and dual-use SMBs developing infrastructure, energy, cybersecurity, digital capabilities, and advanced technologies. According to The Globe and Mail, the funding will be deployed over five years. CIBC’s commitment came a day after the Royal Bank of Canada (RBC) launched a $1.4-billion CAD fund for scaling Canadian tech companies, including defence firms, and a day before the Bank of Montréal (BMO) announced its intent to mobilize up to $70 billion over the next decade to finance sectors such as defence.
From the source: “Canadian businesses in the defence and resiliency ecosystem have the expertise and ambition to lead,” CIBC president and CEO Harry Culham said in a news release. “Our $2-billion commitment reflects our confidence in Canadian businesses and our determination to help them access the financial support they need to scale and succeed.”
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The context: After decades of underinvestment compared to its allies, the Government of Canada is preparing to pour billions of dollars into reducing the country’s dependence on the US and building a “robust” Canadian defence industry. SMBs are expected to play a pivotal part in these efforts, but many are still having trouble breaking into the sector. Canadian banks have historically shied away from investing in these types of firms.
Final thought: With the federal government’s recent about-face on defence spending under Prime Minister Mark Carney, CIBC, BMO, RBC, and the country’s other big banks are now looking to play a larger and more active role in lending to companies capable of meeting Canada’s defence needs. Scotiabank plans to issue defence bonds to help raise money to provide loans to Canadian defence firms, while National Bank of Canada has brought on retired general Rick Hillier as an advisor to guide its defence strategy as it looks to grow its client base in the space.
Feature image courtesy CIBC.